Reading the Fed's "dot plot": What the new projections mean for 2027 yields
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What is the Federal Reserve dot plot and what did the September 2026 projections reveal?
The Federal Reserve "dot plot" is part of the quarterly Summary of Economic Projections (SEP), mapping out where each FOMC member expects benchmark interest rates to land over the next three years. In the September 16, 2026 release, policymakers raised the median federal funds rate projection to 4.10% for year-end 2026 (up from 3.80% in June) and signaled a higher trajectory of 4.10% through 2027. This indicates that interest rates are projected to remain elevated well into 2027, creating an environment that cash savers exploring fixed-rate certificates of deposit (CDs) may find appealing.
Key takeaways
The median projection for year-end 2026 and 2027 moved up to 4.10%.
Policymakers penciled in one potential additional 0.25% rate hike before year-end.
Central bank officials expect borrowing costs and cash yields to remain elevated through 2027 rather than seeing rapid cuts.
With 2027 base CD rates projected around 4.00%, multi-year fixed-rate CDs offer a way for savers to lock in predictable annual returns before gradual easing is expected to begin in 2028.
What is the "dot plot" and why does it matter?
Every three months (March, June, September, and December), the Federal Reserve Board of Governors and regional bank presidents publish the Summary of Economic Projections (SEP). The most watched component of this release is the "dot plot" — a scatter graph where each dot represents an individual policymaker's judgment of the central bank's benchmark target rate at the end of each calendar year.
While the formal FOMC rate announcement details immediate policy, the dot plot provides a forward-looking roadmap for where interest rates, inflation, and economic growth are expected to settle over the next 12 to 36 months.
September 2026 SEP median rate trajectory
Year-End 2026: 4.10% (Up from 3.80%)
Year-End 2027: 4.10% (Up from 3.60%)
Year-End 2028: 3.90% (Up from 3.40%)
Longer Run: 3.20% (Up from 3.10%)
Detailed breakdown: Comparing June vs. September projections
The September 2026 dot plot revealed a recalibration across key economic indicators. Policymakers revised economic growth projections upward while lifting baseline interest rate forecasts.
Economic Indicator | June 2026 Projection | September 2026 Projection | Policy Direction |
Federal Funds Rate (2026) | 3.80% | 4.10% | +30 bps (Signals 1 more hike) |
Federal Funds Rate (2027) | 3.60% | 4.10% | +50 bps (Rate cuts delayed) |
Federal Funds Rate (2028) | 3.40% | 3.90% | +50 bps (Elevated yield floor) |
Real GDP Growth (2026) | 2.20% | 2.30% | +0.10% (Resilient growth) |
Core PCE Inflation (2026) | 3.30% | 3.40% | +0.10% (Persistent inflation) |
Unemployment Rate (2026) | 4.30% | 4.10% | -0.20% (Tighter labor market) |
Why did the Fed raise Its 2027 rate expectations?
Economic resilience: U.S. GDP growth was revised upward to 2.30% for 2026, signaling that elevated interest rates have not triggered an economic slowdown.
Labor market strength: The projected unemployment rate for year-end 2026 was lowered to 4.10%, giving the central bank breathing room to maintain higher rates.
Persistent inflation: Core PCE inflation expectations were revised up to 3.40% for 2026, requiring monetary policy to stay restrictive longer to work toward the 2.00% target.
What the dot plot means for your cash strategy
Understanding where Fed officials see rates heading can help savers balance variable accounts, such as high-yield savings accounts (HYSAs), and fixed-rate term accounts, such as certificates of deposit (CDs).
1. The short-term HYSA outlook (variable yields)
With the median benchmark rate expected to remain around 4.10% through 2027, top online high-yield savings accounts are expected to continue offering competitive variable rates above historical averages. However, because HYSA rates fluctuate with market conditions, any unexpected economic shift in 2027 could lead financial institutions to lower variable savings yields.
2. The multi-year CD outlook (fixed yields)
Because the Fed penciled in 4.10% for 2027 before dropping toward 3.90% in 2028, many commercial banks continue to price multi-year CDs with higher yield floors. Opening a 1-year, 2-year, or 3-year CD allows savers to secure fixed yields that remain unchanged even if policy rates shift later in the cycle.
How savers structure cash across products
Cash Type | Product | Commonly Used For |
Liquid Cash | High-yield savings account (HYSA) | Maintaining immediate access to funds while earning competitive APYs |
Mid-Term Cash | 1-year fixed CD | Capturing current yield levels with protection against near-term rate drops |
Long-Term Cash | 2- to 3-year CD | Locking in a high rate now to avoid lower returns with anticipated 2028 rate cuts |
Explore competitive fixed APYs with Raisin
Whether interest rates hold steady or shift in 2027, managing your savings strategy across top financial institutions does not require opening dozens of separate accounts. Through a single login at Raisin, you can compare and fund high-yield savings accounts and fixed-rate CDs from a nationwide network of FDIC- and NCUA-insured partner banks and credit unions using SOC 2-certified technology.
Exploring the Raisin newsroom
Interest rate decisions, inflation data, and deposit market dynamics change rapidly. Savers can check back for updated rate snapshots, macro breakdowns, and educational personal finance guides to help keep cash earning competitive yields.
Frequently asked questions
Is the Fed dot plot an official guarantee of future interest rates?
No. The dot plot reflects non-binding forecasts from individual FOMC members based on current economic conditions. If economic conditions change, central bank officials adjust policy independent of previous projections.
How do 1-year and 3-year CDs compare under the September dot plot?
With 2026 and 2027 median rates projected at 4.10%, 1-year CDs offer strong short-term yield potential. Savers looking to mitigate the impact of projected rate reductions in 2028 (down to 3.90%) often utilize 3-year CDs to maintain a fixed return over a longer horizon.
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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.
Sources:
Fed 2026 SEP Dot Plot Announcement (Mitrade): https://www.mitrade.com/au/insights/news/live-news/article-6-2092334-20260917
Federal Reserve Rate Decision & SEP Analysis (Seeking Alpha): https://seekingalpha.com/news/4643464-fed-sees-one-more-rate-hike-in-2026-according-to-hawkish-september-dot-plot
September 2026 Economic Indicators & Forecasts (Investing Live): https://investinglive.com/central-banks/fed-dot-plot-signals-another-2026-rate-hike-as-growth-strengthens-and-inflation-remains-elevated/
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