When will the Federal Reserve (Fed) raise interest rates? Discussions during the Fed’s June policy meeting—revealed Wednesday—showed caution over events in Greece and China, suggesting the possibility of lower rates for a longer time frame. But for a more quantitative insight into this oft-discussed question, let’s examine the Fed’s so-called “dot plot.”
The “dot plot” is a visualization indicating where the Fed’s 17 policy makers1 project the benchmark interest rate in the months and years ahead. Their views, as a whole, are one potential indicator of central-bank officials’ beliefs on when rates may rise, and how high they may go.
So what does the dot plot tell us? We believe it suggests that the Fed is planning to act—but the pace of rate increases may be slower than previously anticipated.
