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December 15, 2021

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.

[Row of dots representing the median for 2021, 2022, 2023 and longer run circled]

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

[Row of dots representing 0%-0.25% in 2021 circled] The Fed funds rate ended 2021 in the 0% to 0.25% range.

[Dots representing 0.75% - 1.0% in 2022 circled] The median dot projects three 0.25% rate hikes in 2022 …

[Dots representing 1.5% - 1.75% in 2023 circled] … and three more increases in 2023.

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