What is the Fed Summary of Economic Projections?

The Summary of Economic Projections (SEP) is released four times per year alongside the Federal Reserve's March, June, September, and December FOMC meeting statements. Each FOMC participant (19 members, including both voters and non-voters) submits individual projections for real GDP growth, the unemployment rate, PCE inflation, core PCE inflation, and the appropriate target range for the federal funds rate at year-end for the current and next three calendar years, plus the "longer run."

The interest rate projections, displayed as a scatter plot with each participant's estimate as a dot, have become known as the "dot plot" and are among the most closely watched releases in global finance. The median dot for each projection period is interpreted as the Committee's central expectation for the rate path. A shift in the median dot, say from three rate cuts expected in 2025 to two, can trigger substantial moves in Treasury yields, equity prices, the dollar, and crypto within minutes of release.

Interpreting the SEP requires understanding its limitations. The projections are not commitments or even formal forecasts; they represent each participant's view of the "most likely" outcome conditioned on their own assumptions about "appropriate" monetary policy. Different participants may have vastly different underlying models. The range of dots for any given year can span 100-150 basis points, reflecting genuine uncertainty and disagreement among policymakers. The median is a useful summary, but the distribution matters, especially whether there is a tight cluster or a wide dispersion.

For market participants, the SEP provides three types of information: the expected policy path (the dots), the economic context for that path (growth, unemployment, and inflation forecasts), and the longer-run neutral rate estimate. The longer-run dot is particularly consequential because it represents participants' estimates of where rates will settle once the economy reaches equilibrium. A rising longer-run median dot, which has moved from 2.5% to 3.0% in recent years, signals that the Fed believes the neutral rate has increased, with implications for how high rates may remain even after the current cycle ends.