Wednesday, June 18, 2014

FOMC Projections and Press Conference

by Bill McBride on 6/18/2014 02:14:00 PM


Statement here ($10 billion in additional tapering as expected).

As far as the "Appropriate timing of policy firming",  participant views were mostly unchanged (12 participants expect the first rate hike in 2015, and 3 in 2016 - so one participant moved from 2015 to 2016).

The FOMC projections for inflation are still on the low side through 2016.

Yellen press conference here.

On the projections, GDP for 2014 was revised down significantly, the unemployment rate was revised down again, and inflation projections were increased slightly.  Note: These projections were submitted before the most recent CPI report.

GDP projections of Federal Reserve Governors and Reserve Bank presidents
Change in Real GDP1201420152016
June 2014 Meeting Projections2.1 to 2.33.0 to 3.22.5 to 3.0
Mar 2014 Meeting Projections2.8 to 3.03.0 to 3.22.5 to 3.0
1 Projections of change in real GDP and inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

The unemployment rate was at 6.3% in May. 

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents
Unemployment Rate2201420152016
June 2014 Meeting Projections6.0 to 6.15.4 to 5.75.1 to 5.5
Mar 2014 Meeting Projections6.1 to 6.35.6 to 5.95.2 to 5.6
2 Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of April, PCE inflation was up 1.6% from April 2013, and core inflation was up 1.4%.  The FOMC expects inflation to increase in 2014, but remain below their 2% target (Note: the FOMC target is symmetrical around 2%). 

Inflation projections of Federal Reserve Governors and Reserve Bank presidents
PCE Inflation1201420152016
June 2014 Meeting Projections1.5 to 1.71.5 to 2.01.6 to 2.0
Mar 2014 Meeting Projections1.5 to 1.61.5 to 2.01.7 to 2.0

Here are the FOMC's recent core inflation projections:

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents
Core Inflation1201420152016
June 2014 Meeting Projections1.5 to 1.61.6 to 2.01.7 to 2.0
Mar 2014 Meeting Projections1.4 to 1.61.7 to 2.01.8 to 2.0

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