The 'dots' signal that rate hikes are coming

Andy Kiersz

The Federal Reserve just released their most recent statement on monetary policy.

In addition to the statement, the FOMC released their projections on where they think the economy will be heading in the next few years.

The Dot Plot, part of the FOMC's Summary of Economic Projections released along with the policy decision statement, shows where each participant in the meeting thinks the federal funds rate should be at the end of the year for the next few years and in the longer run.

While the Dot Plot is not an official policy tool, it provides some insight into how the committee members feel about economic and monetary conditions going forward.

The new dot plot shows that all 17 members expect that the appropriate federal funds rate for the end of 2015 should be under 1%, with the median member seeing rates between 0.5% and 0.75%. That would appear to signal an end to zero interest rate policy, and thus rate hikes later this year.

The last dot plot, from March, was also relatively dovish. The median FOMC member saw rates at the end of 2015 being between just 0.5% and 0.75%.

Using the current dot plot and the March plot, Business Insider put together this chart comparing the dots over the last two meetings. The March dots are in green, and the June dots are in purple:

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