Wednesday, April 25, 2012

FOMC Forecasts and Bernanke Press Conference

by Bill McBride on 4/25/2012 02:00:00 PM

Here are the updated projections from the April meeting.

Fed Chairman Ben Bernanke's press conference starts at 2:15 PM ET. Here is the video stream.

Below are the update projections starting with when participants project the initial increase in the target federal funds rate should occur, and the participants view of the appropriate path of the federal funds rate. I've included the chart from the January meeting to show the change.


Appropriate Timing of Policy FirmingThe four tables shows the FOMC April meeting projections, and the previous two projections (November and January) to show the change.

Click on graph for larger image.

"The shaded bars represent the number of FOMC participants who project that the initial increase in the target federal funds rate (from its current range of 0 to ¼ percent) would appropriately occur in the specified calendar year."

Appropriate Timing of Policy FirmingHere is the January chart for comparison.

There was a slight shift to 2014.

Probably two participants moved from 2015 to 2014, and both participants who viewed 2016 as appropriate have moved to 2015.

A key is the same number of participants think the FOMC should raise rates before 2014.

Appropriate Pace of Policy Firming"The dots represent individual policymakers’ projections of the appropriate federal funds rate target at the end of each of the next several years and in the longer run. Each dot in that chart represents one policymaker’s projection."

Most participants still think the Fed Funds rate will be in the current range into 2014.

GDP projections of Federal Reserve Governors and Reserve Bank presidents
Change in Real GDP1201220132014
April 2012 Projections2.4 to 2.92.7 to 3.13.1 to 3.6
January 2012 Projections2.2 to 2.72.8 to 3.23.3 to 4.0
November 2011 Projections2.5 to 2.93.0 to 3.53.0 to 3.9
1 Projections of change in real GDP and in inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

GDP projections have been revised up slightly for 2012, and revised down for 2013 and 2014.

The unemployment rate declined to 8.2% in March, and the projection for 2012 has been revised down.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents
Unemployment Rate2201220132014
April 2012 Projections7.8 to 8.07.3 to 7.76.7 to 7.4
January 2012 Projections8.2 to 8.57.4 to 8.16.7 to 7.6
November 2011 Projections8.5 to 8.77.8 to 8.26.8 to 7.7
2 Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

The forecasts for overall and core inflation were revised up to reflect the recent increase in inflation.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents
PCE Inflation1201220132014
April 2012 Projections1.9 to 2.01.6 to 2.01.7 to 2.0
January 2012 Projections1.4 to 1.81.4 to 2.01.6 to 2.0
November 2011 Projections1.4 to 2.01.5 to 2.01.5 to 2.0

Here is core inflation:

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents
Core Inflation1201220132014
April 2012 Projections1.8 to 2.01.7 to 2.01.8 to 2.0
January 2012 Projections1.5 to 1.81.5 to 2.01.6 to 2.0
November 2011 Projections1.5 to 2.01.4 to 1.91.5 to 2.0

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