What Is the US Federal Reserve Dot Plot?

The Fed dot plot is a critical news release

Column Detail at Federal Reserve
••• Lance Nelson / Getty Images

U.S. Federal Reserve policy is critical to all global financial markets, so any insight into what the Fed is thinking always gets a great deal of attention from investors. That’s why the Fed “dot plot” has become one of the most-watched news releases over the years. 

What Is the Dot Plot? 

The dot plot is published after each Fed meeting. It shows the projections of the 12 members of the Federal Open Market Committee (FOMC), the rate-setting body within the Fed. One bank presidents from each of four groups of banks fill rotating seats:

  • Boston, Philadelphia, and Richmond
  • Chicago and Cleveland
  • Dallas, St. Louis, and Atlanta
  • San Francisco, Kansas City, and Minneapolis

Each dot represents a member’s view on where the fed funds rate should be at the end of the various calendar years shown, as well as in the long run — the peak for the fed funds rate after the Fed has finished tightening or “normalizing” policy from its current levels. The dot plot represents the Fed’s ongoing effort to become more transparent with respect to its policies. 


As of March 2018, the members' average expectation is for rates to hit 2 percent to 2.25 percent by the end of the year and possibly as high as 2.75 percent in the long run. The current target for the fed funds rate is 1.25 to 1.5 percent. 

More important than the absolute number for the FOMC members’ projections is the direction of movement. In short, investors want to know whether the FOMC is leaning toward looser monetary policy and reducing rates, or tighter policy — which would mean rising rates. For example, a shift toward higher rates in the dot plot in March 2014 led to a short-term sell-off in both stocks and bonds, a reflection of investors’ fear that the Fed might raise rates sooner than expected.

The current dot plot includes projections for 2019, 2020, and longer term. It's expected that the federal funds rate will sit at about 2.1 percent by the end of 2019. 

What the Dot Plot Isn’t

Keep in mind when you're looking at the chart that each dot represents a member’s view of the range where rates should be at that time. Their dot is in the center of the range. In other words, the dots shouldn’t be taken to represent that a member is targeting that specific number.

It’s also important to remember that the Fed remains data-dependent, adjusting its policy based on economic trends, inflation, and global events. In the event of major developments such as a terrorist attack, a severe economic downturn, or a sharp jump in inflation, the members will shift projections from their current level. As a result, the longer-term projections on the dot plot carry less weight than those that are closer to the present.

Finally, the FOMC membership changes and rotates among the various member banks in the system. In other words, the people behind the dots change over time — another potential source of shifts in the dot plot. 

Other Considerations

There's no way to tell which dot belongs to which member, so investors don’t have a sense of how much weight to attach to a dot that's an outlier with the range for a certain period. Nor is there any indication which dot belongs to 2018 Fed Chair Jerome Powell.

Naturally, this won’t stop market participants from reading a great deal into the specific averages that are generated by each new iteration of the dot plot. Bond investors should expect that this release will be a new source of market volatility after each Fed meeting. Former Fed Chair Janet Yellen warned that people “should not look at the dot plot as the primary way in which the Committee is speaking to the public at large.”

The Bottom Line

Consider the dot plot as one more tool you can use to make investment decisions, but — as is the case with any single indicator — be careful not to read too much into it.