Will the Fed's Dot Plot be Nixed Under its New Chair?

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Polo Rocha

Polo Rocha

Full Bio Polo Rocha has written about economics and banking for a decade.

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Published May 12, 2026

04:52 PM EDT

A person speaking into a microphone at a formal setting gesturing with open hands

Incoming Fed Chair Kevin Warsh may want to overhaul the system in which central bankers publish their forecasts. Mandel NGAN / AFP via Getty Images

KEY TAKEAWAYS

  • The Federal Reserve's dot plot, which shows policymakers' interest rate projections, may be overhauled or eliminated under incoming Chair Kevin Warsh.
  • Critics argue the dot plot can limit the Fed's flexibility and mislead markets by treating projections as fixed forecasts.
  • Some experts suggest improving the dot plot by linking interest rate projections to economic forecasts like GDP, inflation, and unemployment.

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The Federal Reserve's quarterly dot plot, which markets latch onto for hints of the Fed's future moves, may undergo an overhaul under incoming Chair Kevin Warsh.

For better or worse, the dot plot gets lots of airtime at Fed meetings. That's because the dots represent where each of the Fed's 19 policymakers thinks the benchmark interest rate should be at year-end.

Headlines quickly blare out the median of those 19 forecasts—declaring whether Fed officials are leaning toward rate cuts, hikes or no changes at all.

Investors are bracing for less guidance under Warsh, who has long argued the Fed over-communicates and needs a new strategy. The dot plot can tie the Fed's hands and make them hesitant to pivot from their forecasts when needed, he said.

"The Fed tells the whole world what their dots are going to be, what their forecasts are going to be," Warsh said at a Senate hearing last month. "The Fed's human. ... They hold on to those forecasts longer than they should."

Overhauling the forecast system is far from a novel idea. Outgoing Fed Chair Jerome Powell said last month he "was never the world's biggest fan of the dot plot."1 The Fed has debated reworking it but couldn't land on an alternative that got broad support from the 19-member Federal Open Market Committee, he said.

The Fed started publishing the dot plot in 2012. The forecasts at the time helped the Fed communicate its intention to stick with its ultra-low rate policies to help an economy still recovering from the 2008 financial crisis.2

But the dot plot’s days may be numbered under Warsh, at least in its current form.

"If he comes in with a pretty firm view about what he wants to do, I think he'll be able to actually build some agreement there," said Collin Martin, head of fixed income research and strategy at the Schwab Center for Financial Research.

The Median Dot

Any debate about the dot plot will center on one specific dot: the median.

That number is a helpful summary of Fed officials' disparate views, Martin said, but markets at times wrongly treat it as an ironclad forecast.

The most recent dot plot from March, for example, suggested the median Fed official believes one more rate cut may be in the cards in 2026.3 But the uncertainty around the Iran war is making any forecasts tricky—and the dot plot showed that one sizable camp of Fed officials was hesitant about rate cuts.

"Everyone harps on one cut, two cuts, one hike, two hikes, when that's a snapshot," Martin said. "The reality is, there's a lot of different views in there."

It's a point that Powell has repeatedly emphasized. In a 2019 speech, he compared the dot plot to pointillist art, where many thousands of dots combine into a coherent painting but don't say much on their own.4

"If you are too focused on a few dots, you may miss the larger picture," he said.

Gauging Fed Reaction

The bigger picture is giving the public a better understanding of the Fed's "reaction function."

For example, if inflation heats up but the job market stays stable, could the Fed raise rates—and if so, how much? What if an inflation spike coincides with unemployment rising? And since the Fed has 19 members, how much do those views vary?

The dots themselves are anonymous. But the dot plot helps the public get "a sense of the overall outlook of the committee," said former Cleveland Fed President Loretta Mester, who now teaches at the Wharton School of the University of Pennsylvania.

Still, she added, the Fed should keep trying to communicate "what it is and what it isn't."

"You want to convey how policy will evolve conditional on how the economy evolves," Mester said. "That's a hard concept to convey. The dot plot, I think, is one way to do it, but it probably needs some more explanation to make it more effective."

Mester suggested one change: linking each Fed official's dot to their projections on GDP, unemployment and inflation. Right now, two Fed officials' forecasts may show agreement on interest rates, even as they have starkly different assessments of the economic outlook.

"There is no context around the participant's forecast or any risks the member sees," wrote Joseph Abate and Monty Gandhi, U.S. interest rate strategists at SMBC Nikko Securities Americas.

The Fed may opt for an approach that lays out different scenarios, they wrote. But there's a risk that a forecast overload could mean "markets may stop paying attention," they added.

Still Some Value

For all the dot plot's faults, many Fed watchers still see value in it.

Some 56% of them found it "useful or extremely useful," according to a Brookings Institution survey this year of academics and private sector Fed observers.5 While they thought the Fed’s post-meeting statement and Powell’s remarks were more useful, only 19% of those surveyed said the Fed should scrap the dot plot.

Removing it may not be so easy, wrote Larry Meyer, a former Fed governor and co-founder of Monetary Policy Analytics. For one, making bond investors more uncertain about the Fed's outlook may push up longer-term interest rates, making it more expensive for households and businesses to borrow.

"It might be tough to take the dots away when policymakers (and the market) are used to them," Meyer wrote.

The series of projections the Fed releases in the dot plot also helps the Fed stay accountable to the public and to Congress, said Mester, who led the Cleveland Fed from 2014 to 2024.

"I think we as the public deserve to know: What are they really thinking about how the economy is going to evolve, and what do they think is then the appropriate policy path?" Mester said.

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  1. Board of Governors of the Federal Reserve System. “Transcript of Chair Powell’s Press Conference April 29, 2026.”
  2. Board of Governors of the Federal Reserve System. “Summary of Economic Projections.”
  3. Board of Governors of the Federal Reserve System. “Table 1. Summary of Economic Projections, 2026–2028 and Longer Run.”
  4. Board of Governors of the Federal Reserve System. “Monetary Policy: Normalization and the Road Ahead.”
  5. The Brookings Institution. “Grading Fed Communications: A 2026 Survey of Fed Watchers.”

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