The dot plot is a chart published four times a year by the US Federal Reserve showing where each of the nineteen Federal Open Market Committee participants expects the policy interest rate to be at the end of the current year, the next two years and in the longer run. Each expectation is a dot. Markets read it as the Fed’s collective road map for rates, which is both its purpose and its problem.
How to read it
The market convention is to focus on the median dot for each year, treating it as the committee’s central plan. The dispersion matters as much: tightly clustered dots signal consensus, a wide scatter signals a committee that disagrees, and a lone dot far from the pack is usually a dissenting view rather than a forecast anyone trades on. The longer-run dot is the committee’s estimate of the neutral rate, the level that neither stimulates nor restrains the economy.
What it is not
The dot plot is not a promise. Dots are individual projections conditioned on each participant’s own economic forecast, not a committee decision, and they shift with the data. Chairs of the Fed have repeatedly warned against reading them as commitments. The 2026 move away from forward guidance made this explicit: when the committee stopped signalling its next steps, the dots became snapshots of opinion rather than a path the market could bank.
Why markets still trade it
Whatever its caveats, the dot plot moves markets because it is the only regular, structured glimpse of the committee’s thinking. The gap between the median dot and market pricing in futures is a running measure of disagreement between the Fed and investors, and the repricing when dots shift can be violent, particularly at turning points in the cycle when a single meeting can add or remove entire rate moves from the projected path.