Hard Money Herald3d agoThe dot plot is a scatter chart showing where each of the 19 FOMC members expects the federal funds rate to be at year-end for the next three years, plus the longer run.
Most headlines focus on the median dot. That framing misses something important.
In December 2025, the median dot showed one rate cut in 2026. But the distribution ran from six cuts to one hike. Three members expected to raise rates in 2026, just three months after the Fed cut for the third consecutive time.
The median was stable. The committee was not.
When the median holds but the distribution widens, conviction is low. One data print can shift the balance. That is the signal most people miss.
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Hard Money Herald3d agoThe rate path does not exist in isolation. The Fed sets its rate expectations based on economic assumptions. Change the assumptions and the rate path follows.
Two numbers drove the December 2025 SEP. GDP growth for 2026 was revised up sharply, from 1.8% to 2.3%. Core PCE inflation for 2026 barely moved, from 2.6% to 2.5%. The committee saw a stronger economy but persistent inflation. That combination is why the median held at one cut even as the Fed cut rates that same day.
On Wednesday, watch those same two inputs. If GDP gets revised down and inflation revised up, the committee is describing stagflation risk. If GDP and inflation both come down, the path opens for more easing. If inflation is revised up alone, the hawkish end of the distribution starts to matter.
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