The FOMC Statement and the Dot Plot: Reading the Fed's Script
Posted: Sat Oct 03, 2026 11:30 pm
The FOMC Statement and the Dot Plot: Reading the Fed's Script
The Federal Open Market Committee meets eight times a year to set US interest rates. The release has several layers, and markets analyze all of them.
First comes the rate decision itself, usually widely anticipated. Markets price in expectations beforehand, so a decision that matches forecasts creates little reaction.
Second is the statement, a short text. Traders compare it with the previous one, looking for changes in wording about inflation, employment, and the outlook. A single changed phrase can move markets.
Third is the press conference, held after the release at most meetings. The chair answers questions, and tone and emphasis can shift price direction several times in an hour.
Four times a year, the committee also publishes a Summary of Economic Projections, including the dot plot. Each dot represents one participant's projection for the future policy rate. The median dot indicates where the committee expects rates to be at the end of the coming years.
The dot plot is not a promise. Projections change as data changes, and participants have different views. But it shapes market expectations of the path of rates.
Spreads and volatility rise sharply around the release. Many traders stay out until after the press conference.
Practical step: before the next meeting, read the previous statement, then compare with the new one and highlight each change.
The Federal Open Market Committee meets eight times a year to set US interest rates. The release has several layers, and markets analyze all of them.
First comes the rate decision itself, usually widely anticipated. Markets price in expectations beforehand, so a decision that matches forecasts creates little reaction.
Second is the statement, a short text. Traders compare it with the previous one, looking for changes in wording about inflation, employment, and the outlook. A single changed phrase can move markets.
Third is the press conference, held after the release at most meetings. The chair answers questions, and tone and emphasis can shift price direction several times in an hour.
Four times a year, the committee also publishes a Summary of Economic Projections, including the dot plot. Each dot represents one participant's projection for the future policy rate. The median dot indicates where the committee expects rates to be at the end of the coming years.
The dot plot is not a promise. Projections change as data changes, and participants have different views. But it shapes market expectations of the path of rates.
Spreads and volatility rise sharply around the release. Many traders stay out until after the press conference.
Practical step: before the next meeting, read the previous statement, then compare with the new one and highlight each change.