The Fed continues to view the economy through rose-coloured glasses–a bad habit for an entity that desperately needs to preserve its battered credibility:
WSJ: The FOMC is now projecting the economy will drop anywhere from 0.5% to 1.3% in 2009. Back in October, members were more sanguine, projecting a range of a 0.2% fall to an increase of 1.1%.
That contraction would be followed by GDP growth of 2.5% to 3.3% in 2010 and growth of 3.8% to 5% in 2011, minutes of the FOMC’s latest meeting show. The FOMC last met Jan. 27 and Jan. 28. On a longer-term basis, the committee is expecting GDP growth of between 2.5% and 2.7%.
“Participants generally expected that strains in financial markets would ebb only slowly and hence that the pace of recovery in 2010 would be damped,” the minutes said.
Just tell the truth, Ben! This year’s going to be horrible.