Wednesday, December 16, 2015

FOMC Projections and Press Conference

by Bill McBride on 12/16/2015 02:15:00 PM

Statement here. Fed Funds Rate target range increased to 1/4 to 1/2 percent.

As far as the "Appropriate timing of policy firming",  participant generally think there will be three to four rate hikes in 2016.

The FOMC projections for inflation are still on the low side through 2018.

Yellen press conference here.

On the projections, mostly projection for Q4 2015 were just narrowed.

GDP projections of Federal Reserve Governors and Reserve Bank presidents
Change in
Real GDP1
2015201620172018
Dec 2015 2.12.3 to 2.52.0 to 2.31.8 to 2.2
Sept 2015 2.0 to 2.32.2 to 2.62.0 to 2.41.8 to 2.2
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 5.0% in November, so the unemployment rate projection for Q4 2015 was set to 5.0%.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents
Unemployment
Rate2
2015201620172018
Dec 2015 5.04.6 to 4.84.6 to 4.84.6 to 5.0
Sept 2015 5.0 to 5.14.7 to 4.94.7 to 4.94.7 to 5.0
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 only 0.2% from October 2014.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents
PCE
Inflation1
2015201620172018
Dec 2015  0.41.2 to 1.71.8 to 2.01.9 to 2.0
Sept 2015  0.3 to 0.51.5 to 1.81.8 to 2.02.0

PCE core inflation was up only 1.3% in October year-over-year.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents
Core
Inflation1
2015201620172018
Dec 2015 1.31.5 to 1.71.7 to 2.01.9 to 2.0
Sept 2015 1.3 to 1.41.5 to 1.81.8 to 2.01.9 to 2.0