Dot Plot: Fed Officials Divided Over Interest Rate Outlook

Perhaps the most anxiously awaited piece of information to come from this week's FOMC meeting was the so called dot plot, i.e. the graphic depiction of each committee member's opinion on where the Fed's policy rate should be at the end of this year, next year, 2027 and in the longer run. And while the median projection for 2025 still suggests that we're going to see two 25 basis point cuts by the end of the year, the dot plot reveals a growing divide over the mid-term interest rate outlook. Even for this year, Fed officials are by no means certain of where things are headed, with seven committee members expecting no cuts this year and eight expecting two 25-point cuts.

And while the median projections for 2026, 2027 and beyond suggest a slow but steady decline in the Fed's policy rate, the variance in the officials' projections grows with each year. "We have pretty healthy diversity of views on the committee," Fed chair Jerome Powell said Wednesday, adding that "people can look at the same data and evaluate the risks differently." The division is likely rooted in the unusually high degree of uncertainty, especially with respect to the effect of tariffs, however, and Powell expects the differences in opinion within his committee to diminish once more economic data comes in.