Thursday, September 17, 2015

FOMC Projections and Press Conference

by Bill McBride on 9/17/2015 02:11:00 PM

Statement here. No rate hike.

As far as the "Appropriate timing of policy firming",  participant views moved out a little on the timing of the first rate hike (13 participants expect the first rate hike in 2015, down from 15 in June, 3 in 2016, up from 2, and 1 in 2017), and the "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 up, the unemployment rate was revised down, and core PCE inflation projections were mostly unrevised.

GDP projections of Federal Reserve Governors and Reserve Bank presidents
Change in
Real GDP1
201520162017
Sept 2015 2.0 to 2.32.2 to 2.62.0 to 2.4
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
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 5.1% in August, so the unemployment rate projection for Q4 2015 was revised lower. 

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents
Unemployment
Rate2
201520162017
Sept 2015 5.0 to 5.14.7 to 4.94.7 to 4.9
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
2 Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of July, PCE inflation was up only 0.3% from July 2014, so the FOMC revised down PCE inflation.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents
PCE
Inflation1
201520162017
Sept 2015  0.3 to 0.51.5 to 1.81.8 to 2.0
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

PCE core inflation was up only 1.2% in July year-over-year.  However core PCE inflation has been running at a 1.7% annualized rate over the last 6 months.

Core PCE inflation projection was unchanged for Q4 2015, but revised down slightly for 2016 and 2017.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents
Core
Inflation1
201520162017
Sept 2015 1.3 to 1.41.5 to 1.81.8 to 2.0
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