Global| Dec 16 2015FOMC Increases Federal Funds Rate; Suggests More to Come
by:Tom Moeller
|in:Economy in Brief
Summary
At today's meeting of the Federal Open Market Committee, the Fed raised the federal funds rate to a target range of 0.25% to 0.50% from 0.00% to 0.25%. The rate had been steady since December 2008, having fallen from a 5.25% high in [...]
At today's meeting of the Federal Open Market Committee, the Fed raised the federal funds rate to a target range of 0.25% to 0.50% from 0.00% to 0.25%. The rate had been steady since December 2008, having fallen from a 5.25% high in August 2007. The Fed also indicated an appropriate rate of 1.4% by the end of 2016, 2.4% by the end of 2017 and 3.3% in 2018.
The Fed cited "considerable improvement in the labor market this year" and confidence that "inflation will rise, over the medium term, to its 2% objective."
Economic projections accompanying today's meeting were little-changed, calling for 2.1% real GDP growth this year, 2.4% next year, 2.2% in 2017 then 2.0% in 2018. Price inflation was expected to increase. The "core" PCE price index was expected to rise 1.3% this year, 1.6% next year, 1.9% in 2017, and 2.0% in 2018. The labor market was expected to remain tight. The unemployment rate was projected to average 5.0% in 2015, then 4.7% from 2016 to 2018.
The press release for today's FOMC meeting can be found here.
The backdrop to today's meeting were M2 growth of 6.0% y/y and monetary base growth of 4.6% y/y. In addition, the foreign exchange value of the U.S. dollar has risen 11.9% during the past year.
Haver's SURVEYS database contains the economic projections from the Federal Reserve Board.
| Current | Last | 2014 | 2013 | 2012 | 2011 | |
|---|---|---|---|---|---|---|
| Federal Funds Rate, % (Target) | 0.25-0.50 | 0.00-0.25 | 0.09 | 0.11 | 0.14 | 0.10 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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