Wednesday, March 16, 2016

FOMC Projections and Press Conference

by Bill McBride on 3/16/2016 02:09:00 PM

Statement here. No change to policy.

As far as the "Appropriate timing of policy firming",  participants generally think there will be two, maybe three, rate hikes in 2016 (down from three to four in December).

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

Yellen press conference here.

On the projections, GDP was revised down for 2016.

GDP projections of Federal Reserve Governors and Reserve Bank presidents
Change in
Real GDP1
201620172018
Mar 2016 2.1 to 2.32.0 to 2.31.8 to 2.1
Dec 2015 2.3 to 2.52.0 to 2.31.8 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 4.9% in February, so the unemployment rate projections for Q4 2016 were lowered slightly.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents
Unemployment
Rate2
201620172018
Mar 2016 4.6 to 4.84.5 to 4.74.5 to 5.0
Dec 2015 4.6 to 4.84.6 to 4.84.6 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 January, PCE inflation was up only 1.3% from January 2015. and the projections for Q4 were lowered.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents
PCE
Inflation1
201620172018
Mar 2016  1.0 to 1.61.7 to 2.01.9 to 2.0
Dec 2015  1.2 to 1.71.8 to 2.01.9 to 2.0

PCE core inflation was up 1.7% in January year-over-year.  The Fed sees little pickup in inflation going forward.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents
Core
Inflation1
201620172018
Mar 2016 1.4 to 1.71.7 to 2.01.9 to 2.0
Dec 2015 1.5 to 1.71.7 to 2.01.9 to 2.0