As a reminder, the Dot Plot shows where each of the members of the FOMC expect the Federal Funds rate to be, given economic conditions. It is an assessment about the appropriate monetary policy. It does certainly not show us, which of the members are doves and which are hawks, even though this a common interpretation.
A higher interest rate forecast does certainly not indicate tighter monetary policy per se. As we all know, interest rates rise during economic expansions and are high during booms. During recessions, interest rates typically fall and have reached record low levels, first during the Great Recession and now the Corona shock one decade later.
A higher dot in the dot plot only indicates that this particular FOMC member forecasts better economic conditions than anticipated by many of his colleagues, which would allow the Fed to set a higher interest rate. Therefore, if anything, forecasters with higher interest rate projections are more dovish on the economy whereas the others have a more pessimistic outlook, which is quite the opposite of what the media usually portrays when interpreting this graph.
However, now with the new AIT framework, the Fed has pledged to keep interest rates lower for longer and has certainly indicated a willingness to temporarily overshoot the inflation target for a while, following a decade of lowflation.
It is absolutely unclear to what extent this willingness to overshoot is represented in the Dot Plot and to what extent FOMC members are incorporating the new framework when assessing the future path of the policy rate. For that reason, the Dot Plot has become even more useless than it was before. I believe that it is time to kill this graph, since the only thing it is doing is muddy the water. With interest rates being stuck at zero, communication about the future path of policy rates becomes even more important and the Dot Plot certainly is not helping in this regard.