by Bill McBride on 3/19/2014 02:15:00 PM
Wednesday, March 19, 2014
The key sentence in the announcement was: "The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run."
Rates will be low for a long long time ...
As far as the "Appropriate timing of policy firming", participant views were mostly unchanged (almost all participants expect the first rate increase in 2015).
Yellen press conference here.
On the projections, GDP was revised down slightly, the unemployment rate was revised down again, and inflation projections were mostly unchanged.
|GDP projections of Federal Reserve Governors and Reserve Bank presidents|
|Change in Real GDP1||2014||2015||2016|
|Mar 2014 Meeting Projections||2.8 to 3.0||3.0 to 3.2||2.5 to 3.0|
|Dec 2013 Meeting Projections||2.8 to 3.2||3.0 to 3.4||2.5 to 3.2|
The unemployment rate was at 6.7% in February.
|Unemployment projections of Federal Reserve Governors and Reserve Bank presidents|
|Mar 2014 Meeting Projections||6.1 to 6.3||5.6 to 5.9||5.2 to 5.6|
|Dec 2013 Meeting Projections||6.3 to 6.6||5.8 to 6.1||5.3 to 5.8|
As of January, PCE inflation was up 1.2% from January 2012, and core inflation was up 1.1%. The FOMC expects inflation to increase in 2014, but remain below their 2% target (Note: the FOMC target is symmetrical around 2%, so this is about the same miss as 2.9% inflation).
|Inflation projections of Federal Reserve Governors and Reserve Bank presidents|
|Mar 2014 Meeting Projections||1.5 to 1.6||1.5 to 2.0||1.7 to 2.0|
|Dec 2013 Meeting Projections||1.4 to 1.6||1.5 to 2.0||1.7 to 2.0|
Here are the FOMC's recent core inflation projections:
|Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents|
|Mar 2014 Meeting Projections||1.4 to 1.6||1.7 to 2.0||1.8 to 2.0|
|Dec 2013 Meeting Projections||1.4 to 1.6||1.6 to 2.0||1.8 to 2.0|