The 'dot plot' is part of the Federal Reserve's quarterly Summary of Economic Projections. Each of the Fed's policymakers anonymously plots where they expect the federal funds rate to sit at the end of the current year, the next couple of years, and over the longer run. Each dot is one official's view.
Markets read the dots for the median — the middle dot in each year — as a signal of the committee's central expectation for the policy path, and they watch how that median shifts from one quarter to the next.
What to look for
Three things matter most. The median for the current and next year tells you the expected number of hikes or cuts. The shift versus the previous dot plot signals whether the committee has turned more hawkish or dovish. And the dispersion of the dots shows how much disagreement exists — a tight cluster implies confidence, a wide spread implies uncertainty.
The 'longer-run' dot is also informative: it represents policymakers' estimate of the neutral rate that neither stimulates nor restrains the economy.
Its limits
The dot plot is a snapshot of expectations, not a commitment. Officials stress that the dots are conditional on the economy evolving as forecast, and they can — and do — change quickly when data surprises. Treat the dots as a guide to current thinking, not a promise.