What To Expect From Tuesday's Fed Minutes And Outlook Revision

ben bernanke

Photo: AP

From Deutsche Bank, a preview of tomorrow’s minutes and GDP outlook revision:[The] FOMC minutes will garner added attention because they will contain the Fed’s updated economic forecasts and more detailed rationale for policymakers’ decision to further expand the balance sheet.  The updated economic forecasts will no doubt buttress the decision for QE2, as the Fed likely lowered its GDP forecast sharply, reduced its inflation estimate and set a higher band for unemployment.  In the Fed’s last publicly available forecast in June, the central tendency was 2.9% to 4.5% on real GDP, 0.6% to 2.4% on the core PCE deflator and 7.6% to 8.9% on the unemployment rate.  We expect these forecast bands to be changed as follows: 2.7% to 3.7% on GDP , 0.5% to 1.8% on inflation and 8.0% to 9.3% on unemployment.

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