Understanding the Federal Reserve's Quarterly "Dot Plot"
The "dot plot" shows projections for the federal funds rate … a key short-term interest rate that can affect savings yields and consumer loan rates.
[Images representing car loans, credit card loans and savings flash on the screen]
Each dot represents the view of a Fed policy maker for the rate’s target range at the end of each year shown.
[Scatter plot with dots for the years 2022-2025 and the “Longer Run” is shown]
Markets generally focus on the median "dot" or projection.
[Median row of dots for each year shown in scatter plot is circled]
At its December meeting, the Fed raised the fed funds rate by 0.50% to a range of 4.25% to 4.5%.
The median dot projects a year-end 2023 rate of 5.125%.
[Row of dots representing 5.125% in 2023 circled]
All but two dots project a rate above 5%, suggesting there’s wide support for a higher rate in 2023.
[All dots above 5% in 2023 are circled]