by Calculated Risk on 9/15/2019 09:55:00 AM
Sunday, September 15, 2019
The consensus is the FOMC will cut the Fed Funds rate 25 bps to a range of 1.75% to 2.0% at the meeting this week. A 50 bps cut is not impossible, but seems unlikely at this meeting.
A key will be if the FOMC signals another rate cut in October. The hints could be in the press conference, or in the dot plot.
Revisions to the economic projections will probably be minor, and the statement will probably be mostly unchanged from July.
Here are the June FOMC projections.
Q1 real GDP growth was at 3.1% annualized, and Q2 at 2.0%. Currently most analysts are projecting around 1.5% to 2% in Q3. So the GDP projections will probably be little changed.
|GDP projections of Federal Reserve Governors and Reserve Bank presidents|
|Jun 2019||2.0 to 2.2||1.8 to 2.0||1.8 to 2.0|
|Mar 2019||1.9 to 2.2||1.8 to 2.0||1.7 to 2.0|
The unemployment rate was at 3.7% in August. The unemployment rate projection for Q4 2019 will probably be little changed.
|Unemployment projections of Federal Reserve Governors and Reserve Bank presidents|
|Jun 2019||3.6 to 3.7||3.6 to 3.9||3.7 to 4.1|
|Mar 2019||3.6 to 3.8||3.5 to 3.9||3.6 to 4.0|
As of July 2019, PCE inflation was up 1.4% from July 2018. This was below the projected range for 2019 however it appears inflation has picked up a little recently - and this projection will probably be mostly unchanged.
|Inflation projections of Federal Reserve Governors and Reserve Bank presidents|
|Jun 2019||1.5 to 1.6||1.9 to 2.0||2.0 to 2.1|
|Mar 2019||1.8 to 1.9||2.0 to 2.1||2.0 to 2.1|
PCE core inflation was up 1.6% in July year-over-year. The projection for core PCE for 2019 will probably be mostly unchanged.
|Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents|
|Jun 2019||1.7 to 1.8||1.9 to 2.0||2.0 to 2.1|
|Mar 2019||1.9 to 2.0||2.0 to 2.1||2.0 to 2.1|
In general the economy has been tracking the June projections.