Federal Reserve officials are scheduled on Wednesday to announce an interest-rate decision and release a fresh set of economic projections.
Policymakers have held interest rates in a range of 5.25 to 5.5 percent since July 2023, after lifting them sharply starting in early 2022 as they battled rapid inflation. They are expected to cut them by either a quarter or half a percentage point, lowering borrowing costs for the first time in more than four years — and predicting more to come.
The question is how much the Fed will change policy and what they will project for the months ahead. Investors will carefully parse the Fed’s forecasts as they try to understand what policymakers are planning.
Here’s how to read the numbers:
The dot plot, decoded
When the central bank releases its Summary of Economic Projections each quarter, Fed watchers focus obsessively on one part in particular: the so-called dot plot.
The dot plot will show Fed policymakers’ estimates for interest rates at the end of the next several years and over the longer run. The forecasts are represented by dots arranged along a vertical scale — one dot for each of the central bank’s 19 officials.
Economists closely watch how the dots are shifting, because it can give a hint about where policy is heading. They fixate on the middle dot, the 10th. That middle, or median, official is regularly quoted as the clearest estimate of where the central bank sees policy heading.
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