Definition
Dot Plot
The dot plot is a chart in which each FOMC member anonymously marks their forecast for future US interest rates, signalling the committee's expected policy path.
Released quarterly in the Fed's Summary of Economic Projections, the dot plot shows where each official thinks rates will be in coming years. The median dot becomes a key market signal for how many hikes or cuts to expect.
Markets, including India's, react strongly when the median shifts: more dots pointing to higher rates is hawkish and pressures emerging-market assets, while a shift toward cuts is dovish. The dots are projections, not promises, and can change meeting to meeting.
Related terms
- Federal Reserve (US Fed)The Federal Reserve is the central bank of the United States, setting US interest rates and money supply, with policy decisions that ripple across global markets including India.
- Federal Open Market Committee (FOMC)The FOMC is the Federal Reserve's policy-setting committee that meets eight times a year to decide US interest rates and the path of monetary policy.
- Federal Funds RateThe federal funds rate is the US Federal Reserve's key policy interest rate, an overnight target range set by the FOMC at which banks lend reserves to one another.
- Forward GuidanceForward guidance is a central bank's communication about the likely future path of policy, used to shape market expectations and influence current financial conditions.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.