DOT PLOT

DOT PLOT  -:

• • When it is released - It comes out with Summary of Economic Projections (SEP).

  • The SEP is released 4 times in a year - March, June, September and December.

  • It is always released at 2 PM E.T at the same time of FOMC meeting.

Each DOT = One Policy Maker

• • Every Federal Reserve governor and regional Fed president submits their view of the “appropriate” federal funds rate at year-end.

  • No names attached → you don’t know which dot belongs to Powell or others.

           Time Horizons

• • This year (end-2025 in the latest one)

  • Next two years (2026, 2027)

  • Longer run (the “neutral rate” – where policy would settle if the economy is stable and inflation is at target).

Vertical Axis = Interest Rate

• • Dots are placed at different levels of the federal funds rate (%).

  • For example: If the median 2025 dot is at 3.9%, it signals policymakers think rates will be near that level by December 2025.

Median vs Distribution

• • Median dot = the middle projection, often used as the “Fed’s forecast” by markets.

  • Spread of dots shows disagreement → wide spread = uncertainty, narrow spread = consensus.

Shifts Over Time

• • Comparing dot plots across meetings shows how Fed views change.

  • Example: If median dots shift higher, that means a more hawkish stance (expecting higher rates).

  • If they shift lower, it’s dovish (expecting cuts sooner).