Meaning of The ''Fed Dot Plot''

U.S. Federal Reserve policy is critical to all of the global financial markets, so any insight into what the Fed is thinking always gains a great deal of attention from investors. That’s why the Fed “dot plot” has become one of the most-watched news releases during the course of the past year.

The dot plot, which is published after each Fed meeting, shows the projections of the 17 members of the Federal Open Market Committee (the rate-setting body within the Fed). Each dot represents a member’s view on where the  fed funds rate should be at the end of the various calendar years shown, as well as the “long run” – the peak for the fed funds rate once the Fed has finished tightening(or “normalizing” ) policy from its current ultra-low levels. The dot plot represents the Fed’s ongoing efforts to become more transparent with respect to its policies.