the The latest Federal Open Market Committee (FOMC) bullet chart, released on Wednesday, suggests interest rates will average 3.4% by the end of 2026.This is in line with September forecasts.
If these expectations come true, the Fed The Fed could implement one rate cut of 25 basis points each in 2026 and 2027.This came after the interest rate was reduced by 25 basis points on Wednesday for the third meeting in a row.
In 2027 and 2028, rates are expected to fall to 3.1%, in line with the September forecast. The long-term forecast remains at 3%.
The Federal Reserve also revised its economic forecasts. the US GDP is now expected to reach 1.7% this yearAn increase from the previous forecast of 1.6%. The economy is expected to grow by 2.3% in 2026Higher than the 1.8% estimated in September.
The unemployment rate is expected to remain at 4.5% by the end of 2025, which is in line with the previously estimated figure. For 2026, unemployment is likely to fall to 4.4%, in line with previous expectations.
Finally, The PCE price index is expected to decline by 2.9% by the end of the year, less than 3.0%. Expected in September. In 2026, PCE inflation is expected to decline to 2.4%, slightly lower than the 2.6% previously expected. By 2027, the PCE index is expected to reach 2.1%.
Dot Plot FAQ
“Dot Plot” is the common name for interest rate forecasts issued by the US Federal Reserve’s Federal Open Market Committee (FOMC), which implements monetary policy. These forecasts are published in the Summary of Economic Outlook, a report in which FOMC members also issue their individual forecasts on economic growth, the unemployment rate, and inflation for the current year and the next few years. The document consists of a chart showing interest rate expectations, with each FOMC member’s forecast represented by a dot. The Fed also adds a table summarizing the forecast range and average for each indicator. This makes it easier for market participants to see how policymakers expect the U.S. economy to perform in the near, medium, and long term.
The US Federal Reserve publishes a “Dot Plot” once every other meeting, or at four of its eight scheduled meetings annually. The Economic Outlook Summary Report is published along with the monetary policy decision.
The Dot Plot provides a comprehensive look at the expectations of Fed policymakers. Since the forecasts reflect each official’s expectations for interest rates at the end of each year, they are considered a leading indicator of looking forward. By looking at a “dot chart” and comparing the data to current interest rate levels, market participants can see where policymakers expect interest rates to go and the general direction of monetary policy. With forecasts released quarterly, the Dot Plot is widely used as a guide to the final price and likely timing of a policy pivot.
The most market-impacting data in the Dot Plot is the federal funds rate forecast. Any change compared to previous expectations is likely to impact the US dollar’s valuation. In general, if the Dot Plot shows that policymakers expect interest rates to rise in the near term, this tends to be bullish for the US dollar. Likewise, if expectations point to lower interest rates in the future, the US dollar will likely weaken.
