Wednesday, June 17, 2015

FOMC Projections and Press Conference

by Bill McBride on 6/17/2015 02:13:00 PM

Statement here, "economic activity has been expanding moderately".

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

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 up slightly, and inflation projections were mostly unrevised.


GDP projections of Federal Reserve Governors and Reserve Bank presidents
Change in
Real GDP1
201520162017
Jun 2015 1.8 to 2.02.4 to 2.72.1 to 2.5
Mar 2015 2.3 to 2.72.3 to 2.72.0 to 2.5
Dec 2014 2.6 to 3.02.5 to 3.02.3 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 May, so the unemployment rate projection for Q4 2015 was revised higher. 

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents
Unemployment
Rate2
201520162017
Jun 2015 5.2 to 5.34.9 to 5.14.9 to 5.1
Mar 2015 5.0 to 5.24.9 to 5.14.8 to 5.1
Dec 2014 5.2 to 5.35.0 to 5.24.9 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 April, PCE inflation was up only 0.1% from April 2014.   PCE inflation was unrevised 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
Jun 2015  0.6 to 0.81.6 to 1.91.9 to 2.0
Mar 2015  0.6 to 0.81.7 to 1.91.9 to 2.0
Dec 2014 1.0 to 1.61.7 to 2.01.8 to 2.0

PCE core inflation was up only 1.1% in April year-over-year.  Core PCE inflation was mostly unrevised for 2015 and 2016.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents
Core
Inflation1
201520162017
Jun 2015 1.3 to 1.41.6 to 1.91.9 to 2.0
Mar 2015 1.3 to 1.41.5 to 1.91.8 to 2.0
Dec 2014 1.5 to 1.81.7 to 2.01.8 to 2.0