What exactly is the dot plot?

Simply put, the dot plot is a chart of Fed officials' 'personal votes' on the future path of interest rates. Each time the Fed meets, 19 officials (7 Board members + 12 regional Fed presidents) each place a dot on the chart indicating where they think the federal funds rate should be at the end of a given future year.^[1] Think of it like an anonymous prediction of 'what score we'll get on the final exam' from each student in a class—each dot is one person's 'mini goal,' but the actual score depends on the teacher's exam and everyone's effort.

Its official name is the 'Distribution of Participants' Individual Assumptions About the Appropriate Level of the Federal Funds Rate,' and it's part of the Fed's Summary of Economic Projections (SEP).^[1] Each dot represents an individual official's judgment, and they're all anonymous—you can see the dots but not who made them. It's like an anonymous vote, which avoids peer influence and lets officials express their true views more freely.

The dot plot has a short history. It was first published on January 25, 2012, as part of the SEP, one of the transparency reforms pushed by then-Chair Ben Bernanke to give the public an early look at FOMC officials' views on the policy rate path.^[2] Before that, the Fed's decision-making process was more of a 'black box' to the market; investors could only guess rate moves from post-meeting statements. The dot plot essentially revealed part of the officials' 'hand,' and while it's just personal views, it gives the market more to go on.

How do you read the dots on the dot plot?

The horizontal axis of the dot plot is time, typically with four positions: end of this year, end of next year, end of the year after, and a 'Longer Run' column.^[7] The height of each dot represents the interest rate level that official thinks is appropriate. The vertical axis is the interest rate—the higher the dot, the higher that official thinks the rate should be. For example, if a dot is at 3.75%, that official expects the rate to be around 3.75% at the end of the year.

The key is the 'median'—sort all the dots from low to high and take the middle value. The market and analysts focus on the median because it represents the committee's overall lean.^[8] If the median is higher than last time, officials think rates will be higher in the future—that's 'hawkish.' If it's lower, it's 'dovish.' For instance, if the median moves from 3.6% to 3.8%, the market reads it as 'the Fed is going to hike,' which affects bond yields and stock prices.

But note: the dots aren't placed arbitrarily. Each dot is rounded to the nearest 1/8 percentage point.^[1] It's like grading an exam to the nearest 0.5 point rather than 0.1, to make the chart clearer. Also, 'end of this year' on the horizontal axis refers to the rate on December 31 of that year, not the rate on the meeting day. So if you see a dot for the end of this year at 3.8%, it means officials expect the rate to reach that level by year-end, while the current rate might still be in the 3.50%-3.75% range.

Is the dot plot a Fed promise?

No! This is the most common misunderstanding. The dot plot is not an official forecast, let alone a promise. Each dot is just an individual, anonymous judgment made under the assumption that 'monetary policy is on an appropriate path,' and it doesn't represent the FOMC's collective stance.^[5] In other words, it's like friends at a party casually saying 'I'm going to lose 10 pounds next year'—no one guarantees it will happen.

So, seeing 18 dots on the dot plot doesn't mean the Fed will definitely follow that path. It's more like a 'mood survey' than an 'action plan.' The Fed's own research emphasizes that the dot plot is just 'individual assumptions,' not policy commitments. If investors treat it as a promise, they can be caught off guard when policy changes.

Also, the dot plot is not a committee vote. The FOMC has 19 participants: 7 Board members + 12 regional Fed presidents; but at any given meeting, only 12 have voting rights (7 Board members + the New York Fed president permanently + 4 rotating seats among the other 11 presidents).^[4] The dot plot is theoretically submitted by all 19 participants, and voting rights have nothing to do with whether someone submits a dot.^[4] That means even if an official doesn't have a vote, their dot still appears on the chart, further showing that the dot plot is just a display of 'everyone's views,' not a decision-making basis.

How often is the dot plot updated, and where can you see it?

The dot plot is published only four times a year, after the FOMC meetings in March, June, September, and December.^[3] The next release is September 16, 2026.^[3] You can find the latest version on the Fed's website under 'FOMC Projections.' This cadence is like a quarterly check-up, taking the 'interest rate temperature' every three months.

Because it updates only quarterly, if economic data changes significantly between releases, the dot plot can become 'outdated.' The Fed's own research finds that SEP/dot plot forecasts are indeed informative at the time of release (with prediction errors lower than market surveys, VAR models, and some market-based indicators), but due to the quarterly update pace, if the market over-relies on old dots, its reaction to new data can be slow.^[6] It's like using a map from three months ago to navigate—if the roads have changed, you might take a detour. So, smart investors treat the dot plot as a 'reference,' not a 'GPS.'

Why are there only 18 dots on the 2026 dot plot?

In June 2026, new Fed Chair Kevin Warsh chaired his first FOMC meeting, but he didn't submit his own dot, saying 'it doesn't help me execute policy.'^[11] So that dot plot had only 18 dots instead of the usual 19. It's like the class president not participating in the anonymous vote, but everyone else votes, so the result still reflects the majority's views.

Warsh has long publicly opposed 'forward guidance' and said during his congressional confirmation hearing that he 'doesn't believe in forward guidance,' viewing tools like the dot plot as of little value.^[12] As a result, market analysts expect the dot plot/SEP format may be reduced, adjusted, or even phased out in the future.^[12] This is important background to keep in mind when interpreting current and future dot plots.

If the dot plot is indeed reduced or eliminated, it might mean it was just a 'transitional tool,' and future communication could be more transparent or revert to a more ambiguous 'discretionary' style. For investors, this is both a challenge—losing a direct reference—and an opportunity—the market might focus more on economic data itself rather than officials' 'jawboning.'

What's the difference between the dot plot and market expectations (like CME FedWatch)?

The dot plot is Fed officials' 'subjective judgment,' while the CME FedWatch tool calculates the 'market-implied rate path' based on federal funds futures prices.^[9] One is the official view, the other is the market's actual traded expectations. You can think of the dot plot as the 'coach's playbook,' and FedWatch as the 'players' actual positioning on the field.'

When the two diverge, it means the market's expectations for the Fed's future path are more hawkish or more dovish than the officials' own.^[9] For example, if the dot plot shows a median rate of 3.8%, but market futures prices imply a higher rate, the market thinks the Fed will hike more. Such divergence often signals market volatility, as investors wonder 'who's right?'

For instance, at the June 2026 FOMC meeting, the committee held the federal funds rate target range at 3.50%-3.75% (unanimous 12-0 vote), while the accompanying dot plot showed the median projection revised up to 3.8%, with 9 of 18 participants expecting at least one more hike this year—a clear hawkish shift.^[10] If at that time CME FedWatch showed the market expecting a year-end rate of only 3.6%, it would mean the market is more dovish than the Fed, and investors might think the Fed is 'bluffing,' leading them to adjust positions. This divergence is both a trading opportunity and a source of risk.

What does 'Longer Run' mean on the dot plot?

'Longer Run' doesn't refer to a specific year, but rather the 'neutral rate' that officials believe will prevail once the economy reaches full employment and price stability.^[7] In simple terms, it's the rate that neither stimulates nor restrains the economy. It's like the 'cruising speed' when driving—not too fast to get a ticket, not too slow to cause a traffic jam.

This value is important because it represents the anchor for long-term rates, not a forecast for a specific year—don't confuse it with 'next year's rate.'^[7] If officials raise the 'Longer Run' rate, it means they think the long-term rate center will be higher, which has profound effects on bond and stock valuations: for example, if the long-run neutral rate rises from 3% to 3.5%, long-term bond yields may rise, and stock valuations may come under pressure because the discount rate is higher. Conversely, if the long-run rate is much lower than the current rate, it might imply more room for rate cuts in the future.