Global| Dec 17 2014FOMC Indicates Patience Toward Raising Rates
by:Tom Moeller
|in:Economy in Brief
Summary
At today's meeting of the Federal Open Market Committee, the Fed indicated, "Based on its current assessment (of the economy), the Committee judges that it can be patient in beginning to normalize the stance of monetary policy." The [...]
At today's meeting of the Federal Open Market Committee, the Fed indicated, "Based on its current assessment (of the economy), the Committee judges that it can be patient in beginning to normalize the stance of monetary policy." The Fed also indicated that despite improvement, "economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run."
Several indicators of economic improvement were noted including "solid" job gains and a lower unemployment rate. Consumer spending and business investment were seen to have risen moderately. The housing recovery, however, was judged to be slow.
Lower energy prices were seen as holding the overall inflation rate down. The Fed also indicated that "longer-term inflation expectations have remained stable."
The Fed released its updated projections for economic activity. Real GDP is expected to grow 2.8% next year and in 2016, before slowing to 2.4% in 2017. The unemployment rate is expected to fall from 5.25% in 2015 to 5.10% in 2017. PCE inflation should total 1.3% next year then 1.9% both in 2016 and 2017. Core price growth of 1.7% is projected for next year then 1.9% in 2016 & 2017.
The press release for today's FOMC meeting can be found here.
The backdrop to today's meeting was slower M2 growth of 6.0% y/y and little growth in the monetary base.
Haver's SURVEYS database contains the economic projections from the Federal Reserve Board.
| Current | Last | 2013 | 2012 | 2011 | 2010 | |
|---|---|---|---|---|---|---|
| Federal Funds Rate, % (Target) | 0.00-0.25 | 0.00-0.25 | 0.11 | 0.14 | 0.10 | 0.17 |
| Discount Rate, % | 0.75 | 0.75 | 0.75 | 0.75 | 0.75 | 0.72 |
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.
More Economy in Brief
