by Calculated Risk on 6/17/2019 11:25:00 AM
Monday, June 17, 2019
The consensus is that there will no change in policy at the FOMC meeting this week, but that the Fed might take a more dovish tone (and possibly even remove the word "patience") - and possibly hint at a rate cut later this year (perhaps as insurance).
Note that Goldman Sachs chief economist Jan Hatzius wrote today: "A Skeptical View of Insurance Cuts". Hatzius thinks the Fed will remain data dependent (any rate cut will be based on the data), and not cut rates as "insurance".
There might some revisions in the economic projections, especially for inflation.
Here are the March FOMC projections.
Q1 real GDP growth was at 3.1% annualized, and most analysts are projecting around 2% in Q2. So the GDP projections will probably be little changed.
|GDP projections of Federal Reserve Governors and Reserve Bank presidents|
|Mar 2019||1.9 to 2.2||1.8 to 2.0||1.7 to 2.0|
|Dec 2018||2.3 to 2.5||1.8 to 2.0||1.5 to 2.0|
The unemployment rate was at 3.6% in May. The unemployment rate projection for 2019 will probably be unchanged or revised down slightly.
|Unemployment projections of Federal Reserve Governors and Reserve Bank presidents|
|Mar 2019||3.6 to 3.8||3.6 to 3.9||3.7 to 4.1|
|Dec 2018||3.5 to 3.7||3.5 to 3.8||3.6 to 3.9|
As of April 2019, PCE inflation was up 1.5% from April 2018. This was below the projected range for 2019 and PCE inflation might be revised down for 2019.
|Inflation projections of Federal Reserve Governors and Reserve Bank presidents|
|Mar 2019||1.8 to 1.9||2.0 to 2.1||2.0 to 2.1|
|Dec 2018||1.8 to 2.1||2.0 to 2.1||2.0 to 2.1|
PCE core inflation was up 1.6% in April year-over-year. So the projection for core PCE for 2019 will probably be revised down.
|Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents|
|Mar 2019||1.9 to 2.0||2.0 to 2.1||2.0 to 2.1|
|Dec 2018||2.0 to 2.1||2.0 to 2.1||2.0 to 2.1|
In general, GDP and the unemployment rate have been at or better than the March projections, however inflation has been softer than the March projections.