Wednesday, June 20, 2012

FOMC Projections and Bernanke Press Conference

by Bill McBride on 6/20/2012 02:00:00 PM

Here are the updated projections from the FOMC meeting.

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


Live Video streaming by Ustream

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 April meeting to show the change.


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

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 April chart for comparison.

There was a shift to 2015 with two additional participants.

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.

On the projections, GDP was revised down, unemployment rate up, and inflation down.

GDP projections of Federal Reserve Governors and Reserve Bank presidents
Change in Real GDP1201220132014
June 2012 Projections1.9 to 2.42.2 to 2.83.0 to 3.5
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
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 down for 2012, and revised down for 2013 and 2014.

The unemployment rate increased to 8.2% in April, and the projection for 2012 has been revised up.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents
Unemployment Rate2201220132014
June 2012 Projections8.0 to 8.27.5 to 8.07.0 to 7.7
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
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 down to reflect the recent decrease in inflation.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents
PCE Inflation1201220132014
June 2012 Projections1.2 to 1.71.5 to 2.01.5 to 2.0
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

Here is core inflation:

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents
Core Inflation1201220132014
June 2012 Projections1.7 to 2.01.6 to 2.01.6 to 2.0
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