Here's the new Fed dot plot
Wikimedia Commons
- The Fed just announced that it intends to raise the benchmark Fed funds rate to a range between 1.25% and 1.5%.
- The FOMC also released its quarterly "dot plot," showing where Fed members expect rates to go in the next few years.
- The median member predicts rates will be between 2 and 2.25% by the end of next year.
The Federal Reserve just announced, as widely expected, that it intends to raise the benchmark Fed funds rate to a range between 1.25% and 1.5%. The central bank also gave us some idea about what its policy makers think is coming in the future.
The "dot plot," part of the FOMC's Summary of Economic Projections released along with the policy decision statement, shows where each participant in the meeting thinks the Fed funds rate should be at the end of the year for the next few years and in the longer run.
The Fed releases those predictions in a chart that includes a dot for each of the members at their target interest rate level for each period.
While the "dot plot" is not an official policy tool, it provides some insight into how the committee members feel about economic and monetary conditions going forward. Indeed, several commenters on Wall Street consider the chart to be pretty important, as it could give a sense of how many more hikes are coming in the next year.
In the plot released after the September meeting, the median FOMC member saw rates rising to between 2.0 and 2.25% by the end of 2018. In the longer term, the Fed expected a gradual schedule of hikes, with rates eventually settling around 2.75%.
The new dot plot is very similar. The median member again saw the rate ending in a range between 2 and 2.25% at the end of 2018, suggesting three hikes next year. In the longer term, the median member expects rates to settle around 2.75%.
Federal Open Market Committee
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