FOMC Economic Projections
Published:
A quarterly summary of Federal Reserve participants' outlooks for US growth, unemployment, inflation and the appropriate policy-rate path.
Full explanation
FOMC Economic Projections are the Federal Reserve's summary of where its policymakers think the US economy and interest rates are likely to go. Released four times a year alongside selected FOMC meetings, they show individual participants' projections for real GDP growth, unemployment, inflation and the appropriate federal funds rate, including longer-run estimates. The release also presents the range of views, uncertainty assessments and perceived risks around the outlook. The chart of individual policy-rate projections is widely known as the "dot plot."
Why traders watch it
Traders use the projections to assess how Federal Reserve participants' economic and policy-rate outlooks may have changed. Revisions to the median forecasts, the distribution of rate projections and the balance of risks can influence expectations for future US monetary policy, affecting USD and US rate markets.
Market interpretation
- USD and FX pairs involving USD
- The release can shift expectations for the relative path of US interest rates, particularly when the policy-rate projections or inflation outlook differ from market expectations.
- US Treasury yields and rate derivatives
- Participants' projected federal funds rate path and changes in the outlook can affect pricing across the expected policy horizon.
- Equities and risk-sensitive assets
- Reassessments of growth, inflation and financial conditions may contribute to volatility, especially when released with an FOMC decision.
Stronger vs weaker outcomes
Markets may focus on changes rather than the absolute level of any single forecast. A higher projected policy-rate path or firmer inflation outlook may be interpreted as consistent with less accommodative policy expectations, while a lower path or weaker activity outlook may be interpreted differently; reactions can depend on the accompanying FOMC decision, statement and press conference.
Typical volatility
High. These are individual policymakers' conditional projections, not a Committee forecast, promise or policy decision. The release combines several variables whose signals can conflict, and the projections are published with an FOMC statement and press conference that may dominate the immediate reaction.
Trading considerations
- Compare the median projections and the distribution of federal funds rate dots with the previous SEP rather than focusing on one dot.
- Read the projections together with the FOMC policy statement, vote and press-conference remarks.
- Allow for wider spreads and fast repricing around the scheduled release time.
- Distinguish projections for the current year, later years and the longer run; they answer different questions.
- Remember that individual projections are conditional and can change materially at later meetings.
Educational guidance only — never a trading signal or recommendation.
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