Dot plot
A chart in the Fed's quarterly projections showing where each FOMC participant expects rates to be at future dates.
Each dot is one participant’s view of the appropriate policy rate at the end of a given year, under their own forecast. The dots are anonymous, and they are not attributed to named officials.
Three things the dot plot is not: it is not a vote, it is not a commitment, and it is not a forecast by the committee as a body. Participants who do not vote at a given meeting still place dots. A median that shifts between releases tells you the distribution of views moved — not that policy has changed.
A worked example
Nineteen participants each mark where they think the federal funds rate should be at the end of this year, next year, the year after, and in the longer run. The chart shows nineteen dots per column. If ten of them sit at 3.50–3.75 percent for year-end and nine sit above, the median is 3.50–3.75 percent. A quarter later, if three participants move their dots up one notch, the median may or may not shift — the median is a middle value, not an average, so it moves only when enough dots cross it.
No dot is labelled. A participant who does not vote this year still places one.
How to read it in coverage
“The Fed sees two cuts this year” means the median dot sits two quarter-points below the current rate — it is a summary of individual guesses, not a plan the Committee adopted. Dots are revised every quarter and have historically been poor predictors of where rates actually went. The honest reading of a dot plot is as a snapshot of how the participants were thinking on one day, with the spread of dots telling you how much they disagreed. A path for the policy rate is still a choice about credit, whatever the dots said last quarter.
It is released four times a year with the Summary of Economic Projections, and is one of the most over-read documents in economic coverage. It is not a vote and not a plan.