The Federal Reserve Just Signaled That Higher Rates Are on the Horizon

The Federal Reserve Just Signaled That Higher Rates Are on the Horizon

If you want to know which way interest rates are headed, one of the first places you should look is the Federal Reserve's dot plot. This isn't as well known as the yield curve, but it's nevertheless important, particularly right now.

The Federal Reserve's headquarters in Washington, D.C. Image source: Getty Images.

The dot plot isn't complicated. The vertical axis rises in quarter-point increments from 0% up to 5%, representing the target level for the federal funds rate, the principal short-term interest rate benchmark in the United States. The horizontal axis, meanwhile, represents years 2017 through 2020 and beyond.

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Source: Fool.com