What is the dot plot?

The dot plot is a chart published by the Federal Reserve as part of its quarterly Summary of Economic Projections (SEP). Each dot represents an individual FOMC member's assessment of the appropriate federal funds rate target at the end of the current year, the next two years, and the "longer run." The chart does not identify which official placed which dot, but it reveals the full distribution of views within the committee.

The dot plot was introduced in January 2012 as part of the Fed's push toward greater transparency and forward guidance. Before the dot plot, markets had limited visibility into the range of opinion within the FOMC. Now, traders can see not just the median expectation but also the degree of consensus or disagreement among policymakers, which provides important information about policy uncertainty.

Markets pay closest attention to the median dot for the current year and next year, which represents the committee's central tendency for the rate path. When the median dot shifts, it signals a change in the Fed's baseline outlook. For example, if the median dot for year-end moves from 5.1% to 4.6%, it indicates that the committee expects to deliver roughly two additional 25-basis-point rate cuts relative to the prior projection.

However, the dot plot has important limitations. It is a snapshot of expectations at a single point in time and can become stale quickly if economic conditions change. Fed Chair Powell has repeatedly cautioned that the dot plot is "not a plan" and that actual policy will depend on incoming data. The dots also reflect each member's own assumption about economic conditions, which may differ across participants.

For market participants, the dot plot release (typically at the March, June, September, and December FOMC meetings) is one of the most important events on the calendar. The gap between market pricing (derived from SOFR futures) and the dot plot median often widens and compresses, creating trading opportunities. When market pricing is more hawkish than the dots, it suggests markets see risks the Fed has not yet acknowledged, and vice versa.