Glossary term
Summary of Economic Projections
The Summary of Economic Projections is the Federal Reserve's quarterly collection of FOMC participants' forecasts for growth, unemployment, inflation, and interest rates.
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What Is the Summary of Economic Projections?
The Summary of Economic Projections, or SEP, is the Federal Reserve's quarterly summary of Federal Open Market Committee participants' projections for key economic variables. It includes forecasts for real GDP growth, the unemployment rate, inflation, core inflation, and the federal funds rate.
The SEP is best known for the dot plot, which shows each participant's view of the appropriate federal funds rate at future year-end dates and over the longer run. The projections are not a promise, a policy vote, or an official forecast from the committee as a whole.
The release is especially powerful because it appears beside the Fed's policy decision, statement, and press conference. Markets can compare what officials did today with what participants think may be appropriate over the next several years.
Key Takeaways
- The SEP summarizes FOMC participants' economic and rate projections.
- It is usually released four times per year with selected FOMC meetings.
- The dot plot is part of the SEP, but the SEP is broader than the dots.
- Markets use it to infer the range of policy views inside the Fed.
- Projections can change quickly when inflation, labor markets, or financial conditions change.
What the SEP Includes
The SEP generally reports central tendencies, ranges, and medians for major economic projections. The real GDP projection shows expected output growth. The unemployment projection shows expected labor-market conditions. The inflation measures show expected price pressure. The federal funds rate projection shows each participant's assessment of appropriate policy, not a binding path.
The SEP also includes qualitative material about uncertainty and risks. Participants may see the risks to inflation, growth, or unemployment as weighted to the upside, downside, or broadly balanced. That context can matter as much as the median forecast.
How Investors Read It
SEP item | What markets often watch |
|---|---|
Federal funds rate dots | Possible policy path and dispersion of views |
Inflation projections | How quickly officials expect price pressure to normalize |
Unemployment projections | How much labor-market cooling officials expect |
Longer-run estimates | Views about neutral rates, trend growth, and sustainable unemployment |
Risk assessments | Whether the committee is more worried about inflation or growth weakness |
What the SEP Is Not
The SEP is not a rate commitment. FOMC participants update their projections as data change. A dot can move from one meeting to the next without anyone breaking a promise. The committee's actual policy decision depends on incoming data, risks, financial conditions, and the balance between employment and price-stability goals.
The SEP is also not a single Fed forecast. Each participant submits projections based on that person's own view of appropriate monetary policy. The median can be useful, but it can hide important disagreement among participants.
Financial Interpretation
The SEP matters because interest-rate expectations feed through bonds, mortgages, bank funding costs, equity valuations, currency markets, and business investment. If the SEP implies higher policy rates for longer, Treasury yields may rise and rate-sensitive assets may reprice. If it suggests faster easing, duration-sensitive assets may rally, though the response depends on why rates are expected to fall.
Investors should compare the SEP with market-implied expectations. A gap between Fed projections and futures pricing can create volatility when speeches, data, or FOMC decisions push one side closer to the other.
A useful habit is to read the SEP as a distribution of views, not just a median. A tight cluster of dots can imply a stronger committee consensus, while a wide spread can signal uncertainty about inflation, employment, or the neutral policy rate. That dispersion can shape how markets react to future data surprises.
The Bottom Line
The Summary of Economic Projections is a window into FOMC participants' views on the economy and appropriate policy. It is valuable because it shows direction, dispersion, and risk balance, but it should be read as conditional guidance rather than a fixed interest-rate roadmap.