What is the FOMC Dot Plot? Definition, Formula, and Example
The FOMC dot plot is a quarterly chart showing each Fed official's projection for the federal funds rate at year-end, used by traders to price the path of interest rates.
What is the FOMC Dot Plot?
The dot plot is a chart published four times a year inside the Federal Reserve's Summary of Economic Projections. Each dot represents one FOMC participant's anonymous forecast for where the federal funds rate should sit at the end of the current year, the next two to three years, and the longer run. Up to 19 officials contribute dots: the seven Board of Governors members and the twelve regional Fed presidents, including those without a current vote. The chart gives markets a direct read on the distribution of rate expectations inside the committee rather than a single consensus statement.
How the Dot Plot Is Constructed and Read
The vertical axis shows the federal funds rate in 25-basis-point increments. The horizontal axis shows time periods: the current year-end, subsequent year-ends, and "longer run," which is the Fed's estimate of the neutral rate. Each participant places one dot per period at the midpoint of the target range they judge appropriate, assuming appropriate monetary policy.
The number traders extract first is the median dot: with 19 participants, it is the 10th dot when sorted. A median year-end dot 25 basis points below the current target midpoint implies one cut is the committee's modal expectation; 50 basis points implies two. The spread of dots matters as much as the median. A tight cluster signals conviction; a wide scatter signals genuine disagreement and raises the odds of surprise.
The longer-run median is the market's anchor for neutral-rate assumptions, and shifts in it reprice the entire yield curve, not just the front end.
Worked Example: The June 2024 Dot Plot
Entering the June 2024 FOMC meeting, the fed funds target sat at 5.25% to 5.50%, where it had been since July 2023. The March 2024 dot plot had shown a median of three 25-basis-point cuts for 2024, implying a year-end midpoint of 4.625%.
The June 2024 release moved the 2024 median to 5.125%, implying only one cut for the year. Seven officials projected two cuts, four projected none, and eight projected one. The 2025 median rose to 4.125% from 3.875%, and the longer-run median ticked up to 2.75% from 2.5625%, the highest neutral-rate estimate in years. Rate futures repriced immediately: the probability of a September cut, tracked through CME-listed fed funds futures, jumped around as traders digested the single-cut median against a soft CPI print released the same morning. The S&P 500 swung in both directions within the hour, a standard reaction when the dots collide with same-day inflation data. In the event, the Fed delivered its first cut in September 2024, a larger 50-basis-point move, showing that even the median dot is a forecast, not a commitment.
When Traders Use the Dot Plot
Rates traders compare the dot medians against fed funds futures pricing to find divergences: when the market prices more cuts than the dots show, front-end yields are vulnerable to a hawkish repricing, and vice versa. Equity traders treat a falling longer-run median as a tailwind for duration-sensitive growth stocks and a rising one as a headwind, since the neutral-rate assumption feeds directly into discounted cash flow models. Dollar traders watch the dots as the cleanest summary of U.S. policy divergence from other central banks. Bond traders pair the dots with the 10-year Treasury yield to judge whether the long end agrees with the committee. Macro traders log every projection day and its market reaction in the trade journal to build a record of how their positioning performed across the cycle.
Limitations and Common Misconceptions
The dots are anonymous and unattributed, so you cannot tell a voting member's dot from a non-voter's, which limits their value as a guide to actual decisions. They are also conditional forecasts: each dot assumes that participant's view of appropriate policy given their economic outlook, and the outlooks differ. The median dot has no formal status inside the committee. Most importantly, the dots go stale fast; projections made in June can be obsolete by August after a single employment report, and the Fed itself has abandoned dot-implied paths repeatedly. Treating the dot plot as a promise rather than a snapshot of conditional opinion is the most common error.