The Dot Plot, Explained: How the Fed Forecasts Interest Rates

It’s almost certainly the most closely scrutinized scatter chart in financial markets. Every three months since January 2012, the Federal Reserve has sent analysts scurrying by updating its “dot plot,” which has become the de facto interest rate forecast of the US central bank — whether the Fed wants it to be or not. It’s also an important if cryptic source of clues to any dissent among Fed policymakers.

What is plotted on the dot plot?

The dot plot is a chart showing estimates of where the federal funds rate, the short-term interest rate controlled by the Fed, should go ...