Wednesday, June 15, 2016

FOMC Projections and Press Conference

by Bill McBride on 6/15/2016 02:07:00 PM

Statement here. No change to policy.

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

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

Yellen press conference on YouTube here.

On the projections, GDP was revised down for 2016 and 2017.

GDP projections of Federal Reserve Governors and Reserve Bank presidents
Change in
Real GDP1
201620172018
Jun 2016 1.9 to 2.01.9 to 2.21.8 to 2.1
Mar 2016 2.1 to 2.32.0 to 2.31.8 to 2.1
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 4.7% in May, however the unemployment rate projection for Q4 2016 was not revised down.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents
Unemployment
Rate2
201620172018
Jun 2016 4.6 to 4.84.5 to 4.74.4 to 4.8
Mar 2016 4.6 to 4.84.5 to 4.74.5 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 April, PCE inflation was up only 1.1% from April 2015.   With the recent increase in oil and gasoline prices, the range of PCE inflation projections was narrowed, and was revised up slightly for 2016.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents
PCE
Inflation1
201620172018
Jun 2016 1.3 to 1.71.7 to 2.01.9 to 2.0
Mar 2016 1.0 to 1.61.7 to 2.01.9 to 2.0

PCE core inflation was up 1.6% in April year-over-year.  Core PCE inflation was revised up for 2016.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents
Core
Inflation1
201620172018
Jun 2016 1.6 to 1.81.7 to 2.01.9 to 2.0
Mar 2016 1.4 to 1.71.7 to 2.01.9 to 2.0