What Is the Fed Dot Plot? Reading the Projections

In December 2021, 18 Federal Reserve officials each marked a dot for where the policy rate should stand at the end of 2022. All 18 dots sat at or below 1.125%. The Fed sets the policy rate as a target range. The midpoint of the range ended 2022 at 4.375%.

This guide explains what the Federal Open Market Committee (FOMC) publishes in its Summary of Economic Projections (SEP), what a dot is and what it is not. It then sets 11 years of December projections against where the rate ended each year. It is a record of past projections. It does not read any current plot.

Participants send in projections four times a year. Members are the 12 people who vote on the FOMC, which the Fed calls "the Committee". Participants are the members plus the Reserve Bank presidents who do not vote. The number of participants changes from plot to plot, from 16 to 19 across the 11 plots.

Each participant gives a number for growth, unemployment, inflation and the Fed Funds Rate. The Fed Funds Rate is the Fed's policy rate, the interest rate that banks charge one another for overnight loans.

The Fed states the rate as a target range, usually 0.25 percentage points wide, such as 4.25% to 4.5%. The midpoint of 4.25% to 4.5% is 4.375%.

Each dot is the midpoint of the range, or the single level, that a participant judges appropriate for a year-end.

The Fed publishes the results soon after each meeting. The SEP of 16 September 2026 was released at 2:00 pm US Eastern time.

Each projection rests on that participant's own view of what policy should be. The SEP says it is based on "his or her assessment of appropriate monetary policy". It defines that as the path each participant "deems most likely" to meet the mandate "to promote maximum employment and price stability".

Table 1 of the SEP gives three summaries for each variable and each year. The median is the middle projection, or the average of the two middle projections when the number is even. The range runs from the lowest to the highest. The central tendency is a narrower range that leaves out the three highest and three lowest.

Projections made in March and June cover the current year, the next two years and the longer run. Those made in September and December add a third year.

The Fed Funds Rate has been in the SEP since January 2012. The dot plot is the chart of those rate projections. How the Fed sets the rate itself is in how the Fed sets rates.

The chart redraws the December 2021 dot plot for the end of 2022, 2023 and 2024. Each blue dot is one participant. The black line marks the median. The orange diamond marks where the midpoint of the target range actually stood at the end of that year.

For the end of 2022, one dot was at 0.375%, five at 0.625%, ten at 0.875% and two at 1.125%. The median was 0.875%, which Table 1 of that SEP rounds to 0.9%. The central tendency ran from 0.625% to 0.875%.

In all three columns, every dot was below where the rate later ended.

The Fed rounds each dot to the nearest 1/8 percentage point. That is why most values here end in 0.125, 0.375, 0.625 or 0.875. Those are the midpoints of ranges 0.25 wide.

A dot is a person's view under that person's own assumptions about the economy. It is conditional. If the economy moves, the dot can move with it.

Initial projections are due on the Friday before the meeting. Participants can change them until the morning of its second day.

The dots are not signed. The chart gives no name beside any dot. A reader can count dots and cannot say who placed them.

The median is not a Committee decision either. Powell told a press conference on 20 September 2023 that the SEP is "a cumulation of individual forecasts from 19 people". He added: "I wouldn't want to, you know, bestow upon it the idea that, that it's really a plan."

The decision comes in the statement. We read it line by line in how to read an FOMC statement. The dot plot comes at only four of the eight meetings a year. The dates are in the FOMC meeting schedule.

We compare each December median with where the rate ended the year it covered. We used every December SEP from 2014 to 2024, which is 11 projections for the year ahead.

We start at 2014 because the December 2013 table is headed "target federal funds rate", not the midpoint of the range. The outcome is the midpoint of the target range in the December statement of the year being projected.

Each row is the year projected, from 2015 to 2025. Each comes from the plot made the previous December. The chart shows each December plot's range as a light bar, its central tendency as a darker bar and its median as a black line. The orange diamond is the outcome.

The median was within 0.25 percentage points of the outcome for 6 of the 11 years. By direction, the median was above the outcome in 6 years, below it in 3 and equal to it in 2. The mean gap, ignoring sign, was 0.8 percentage points.

The outcome fell outside the whole range of dots in 4 years: 2016, 2019, 2020 and 2022.

The largest gap was 2022. The median from December 2021 was 0.875% and the rate ended the year at 4.375%. The gap was 3.5 percentage points. The next largest were 2020 at 1.5 and 2019 at 1.25.

The same plots also give a median two years ahead. There are 10 of these, for the end of 2016 to the end of 2025.

The chart shows the gap between the median and the outcome. Blue bars are projections made one year earlier, or one year ahead. Grey bars are made two years earlier, or two years ahead. A bar to the right means the median was above the outcome.

At two years the gaps were wider. The median was within 0.25 percentage points of the outcome in 3 of the 10 years. It was more than 1 point away in 6.

The mean gap, ignoring sign, was 1.7 percentage points. The largest was 4.25 points, for 2022, from December 2020.

The SEP gives its own measure. Table 2 lists past errors of forecasts of short-term interest rates from various forecasters over 2006 to 2025. Those errors are ±0.5 percentage points for 2026, the current year in the September 2026 SEP, ±1.7 for 2027, ±2.3 for 2028 and ±2.8 for 2029.

The Fed says there is about a 70% probability that outcomes fall within ranges of this size. It adds that these ranges are "not strictly consistent" with the dots. The dots are individual assessments of appropriate policy, made on an end-of-year basis. The ranges measure the errors of those forecasts, which are not the dots.

The ±1.7 for 2027 is not the 1.7 mean gap above. The Fed's figure measures past forecast errors for the next year. Ours is the average distance of the median from the outcome two years ahead.

Our record is not a test of the dots. It counts what happened after each plot was drawn. It says nothing about the next one.

The dots do not show how the vote will go. They do not show who holds which view. They do not carry a date for any rate change.

They show where each participant placed the rate on one day, under that person's own assumptions. The minutes, three weeks later, add the reasons. We explain them in what the FOMC minutes show. The wider cycle is in what the FOMC is.

This explainer is part of the YX Insights Academy. Each one takes a single idea and checks it against real data.

The same approach runs through everything else we publish:

Good places to start on the website:

The dot plot is published four times a year, in March, June, September and December. It is part of the Summary of Economic Projections, which the Fed releases after the FOMC meeting. The October and other non-projection meetings bring no new plot. The FOMC meeting schedule lists each date.

No. Each dot is one participant's view of where the Fed's target range should be at the end of a year. The chart does not name the participant. It shows how many dots sit at each level. The median is the middle one.

No. The SEP says each projection reflects a participant's own view of appropriate policy. Jerome Powell, then Fed Chair, said in 2023 that the SEP is not a plan that is negotiated or discussed as a plan. The decision comes in the statement after each meeting.

The Fed rounds each dot to the nearest 1/8 of a percentage point. Each dot marks the midpoint of a target range. Ranges are usually 0.25 points wide, so many midpoints end in 0.125, 0.375, 0.625 or 0.875.

Across the 11 December plots from 2014 to 2024, the median for the next year-end was within 0.25 percentage points of the outcome 6 times. It was more than 1 point away 3 times. The largest gap was 3.5 points, for 2022. Two years ahead, the gaps were wider.

DISCLAIMER: This article is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.