UPDATE: The FOMC’s updated macroeconomic projections are out.Click here for updates >
2013 GDP growth forecasts were lowered to a range of 2.3-3.0 per cent, down slightly from September’s estimate of 2.5-3.0 per cent.
2012 GDP growth forecasts were lowered to a range of 1.7-1.8 per cent from 1.7-2.0 per cent in September.
2014 GDP growth forecasts were lowered to a range of 3.0-3.5 per cent from September’s estimate of 3.0-3.8 per cent.
15 of the 19 Fed officials see rates below 1 per cent in 2014, while 10 of 19 see rates at 1 per cent or higher in 2015.
ORIGINAL: Minutes away from the release of the FOMC’s updated macroeconomic forecasts and projections for the future path of the Fed funds rate at 2 PM ET.
In the Fed’s latest policy decision, announced at 12:30 PM today, the following language was used to describe the economy:
Information received since the Federal Open Market Committee met in October suggests that economic activity and employment have continued to expand at a moderate pace in recent months, apart from weather-related disruptions. Although the unemployment rate has declined somewhat since the summer, it remains elevated. Household spending has continued to advance, and the housing sector has shown further signs of improvement, but growth in business fixed investment has slowed. Inflation has been running somewhat below the Committee’s longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable.
Most don’t expect much revision to the forecasts, but SocGen economist Aneta Markowska says that the Fed’s “2013 GDP forecast published in September still looks relatively high at 2.5%-3% and is at risk of being revised lower.”
While BofA’s Michael Hanson, Priya Misra, and John Shin don’t see much scope for forecast revisions, they say there is something else the Fed could do to “innovate” at this meeting with regard to forecasting:
At this meeting the FOMC economic projections will also be updated, but we do not expect sizable forecast revisions given the macro uncertainties. One potential innovation, mentioned by Vice Chair Janet Yellen, would be to list joint economic and policy forecasts — that is, grouped by FOMC member, without identifying each forecaster. That way, the market could better distinguish a long policy hold past the onset of the recovery — which is what the FOMC committed to in September — from a less optimistic outlook warranting even more easing.
We will have the full release here at 2 PM ET. Click here for LIVE updates >