Wednesday, March 18, 2015

FOMC Projections and Press Conference

by Bill McBride on 3/18/2015 02:19:00 PM

Statement here "Patient" was removed, unlikely rate hike in April, "growth has moderated".

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

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

Yellen press conference here.

On the projections, GDP for 2015 was revised down, the unemployment rate was revised down again, and inflation projections were revised down (include core inflation).

GDP projections of Federal Reserve Governors and Reserve Bank presidents
Change in
Real GDP1
201520162017
Mar 2015 Meeting Projections2.3 to 2.72.3 to 2.72.0 to 2.5
Dec 2014 Meeting Projections2.6 to 3.02.5 to 3.02.3 to 2.5
Sept 2014 Meeting Projections2.6 to 3.02.6 to 2.92.3 to 2.5
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 5.5% in February, so the unemployment rate projection for Q4 2015 was revised lower. 

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents
Unemployment
Rate2
201520162017
Mar 2015 Meeting Projections5.0 to 5.24.9 to 5.14.8 to 5.1
Dec 2014 Meeting Projections5.2 to 5.35.0 to 5.24.9 to 5.3
Sept 2014 Meeting Projections5.4 to 5.65.1 to 5.44.9 to 5.3
2 Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of January, PCE inflation was up only 0.2% from January 2014, and core inflation was up 1.3%.   PCE inflation wa revised down for 2015, and will be well below the FOMC's 2% target.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents
PCE
Inflation1
201520162017
Mar 2015 Meeting Projections0.6 to 0.81.7 to 1.91.9 to 2.0
Dec 2014 Meeting Projections1.0 to 1.61.7 to 2.01.8 to 2.0
Sept 2014 Meeting Projections1.6 to 1.91.7 to 2.01.9 to 2.0

PCE core inflation was up only 1.3% in January.  Core PCE inflation was revised down for 2015 and 2016.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents
Core
Inflation1
201520162017
Mar 2015 Meeting Projections1.3 to 1.41.5 to 1.91.8 to 2.0
Dec 2014 Meeting Projections1.5 to 1.81.7 to 2.01.8 to 2.0
Sept 2014 Meeting Projections1.6 to 1.91.8 to 2.01.9 to 2.0