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Understanding the Federal Reserve’s Dot Plot

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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.

Each dot represents the view of a Fed policy maker for the rate’s target range at the end of each year shown.

Markets generally focus on the median “dot” or projection.

[Row of dots representing 0%-0.25% in 2021 circled] The median projection is for the Fed funds rate to remain at the current range of 0% - 0.25% through 2021.

[Dots representing 0.385 and 0.635%  in 2022 circled] Nine of the 18 members project rates to rise in 2022.

[Dots representing 0.875%, 1.125%, and 1.625% in 2023 circled] The majority of members project at least three 0.25% rate hies by the end of 2023.

What you can do next

• Follow the Schwab Center for Financial Research (@SchwabResearch) on Twitter.

• Make sure your portfolio is diversified and aligned with your risk tolerance and investment timeframe. Want to talk about your portfolio? Call a Schwab Fixed Income Specialist at 877-566-7982, visit a branch or find a consultant.

• Explore Schwab’s views on additional fixed income topics in Bond Insights.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. 

Data contained herein from third party providers is obtained from what are considered reliable sources.

However, its accuracy, completeness or reliability cannot be guaranteed.

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