Wednesday, December 17, 2014

FOMC Projections and Press Conference

by Bill McBride on 12/17/2014 02:18:00 PM

Statement here "Considerable time" replaced with "patient" - viewed as consistent with previous statement.

As far as the "Appropriate timing of policy firming",  participant views were mostly unchanged (15 participants expect the first rate hike in 2015, and 2 in 2016).

The FOMC projections for inflation are still on the low side through 2017.

Yellen press conference here.

On the projections, GDP for 2014 was revised up, the unemployment rate was revised down again, and inflation projections were revised down (include core inflation).  Note: These projections were submitted before the CPI report this morning.

GDP projections of Federal Reserve Governors and Reserve Bank presidents
Change in
Real GDP1
2014201520162017
Dec 2014 Meeting Projections2.3 to 2.42.6 to 3.02.5 to 3.02.3 to 2.5
Sept 2014 Meeting Projections2.0 to 2.22.6 to 3.02.6 to 2.92.3 to 2.5
June 2014 Meeting Projections2.1 to 2.33.0 to 3.22.5 to 3.0n.a.
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 5.8% in October and November.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents
Unemployment
Rate2
2014201520162017
Dec 2014 Meeting Projections5.85.2 to 5.35.0 to 5.24.9 to 5.3
Sept 2014 Meeting Projections5.9 to 6.05.4 to 5.65.1 to 5.44.9 to 5.3
June 2014 Meeting Projections6.0 to 6.15.4 to 5.75.1 to 5.5n.a.
2 Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of October, PCE inflation was up 1.4% from October 2013, and core inflation was up 1.6%. The FOMC expects inflation to remain below their 2% target in 2015 (Note: the FOMC target is symmetrical around 2%). 

Inflation projections of Federal Reserve Governors and Reserve Bank presidents
PCE
Inflation1
2014201520162017
Dec 2014 Meeting Projections1.2 to 1.31.0 to 1.61.7 to 2.01.9 to 2.0
Sept 2014 Meeting Projections1.5 to 1.71.6 to 1.91.7 to 2.01.9 to 2.0
June 2014 Meeting Projections1.5 to 1.71.5 to 2.01.6 to 2.0n.a.

Here are the FOMC's recent core inflation projections:

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents
Core
Inflation1
2014201520162017
Dec 2014 Meeting Projections1.5 to 1.61.5 to 1.81.7 to 2.01.8 to 2.0
Sept 2014 Meeting Projections1.5 to 1.61.6 to 1.91.8 to 2.01.9 to 2.0
June 2014 Meeting Projections1.5 to 1.61.6 to 2.01.7 to 2.0n.a.