How many rate hikes are on tap? Wall Street hopes to connect the Fed’s ‘dots.’

The Federal Reserve's quarterly "dot plot" — the anonymous projections each official submits for where the benchmark rate is headed — often draws more attention than the rate decision itself. If policymakers raise rates this week in an effort to tame inflation, investors will parse those dots for signals on how much further borrowing costs might climb, and how quickly.

The chart matters because markets price expectations, not just current levels. A dot plot showing a higher or faster path than investors anticipate can tighten financial conditions on its own, pushing up Treasury yields and pressuring rate-sensitive corners of the market. A more moderate set of projections can do the opposite.

What to watch: the spread between where officials see rates peaking and where markets are priced, and any shift in the projected path for the following year. Those gaps often reveal how much the Fed and investors disagree about the inflation fight ahead.