Global| Mar 21 2018FOMC Lifts Rates as Real Growth & Inflation Firm
by:Tom Moeller
|in:Economy in Brief
Summary
At today's meeting of the Federal Open Market Committee, the federal funds rate target was raised to a range of 1.50%-1.75% from 1.25%-1.50%. The financial markets had expected today's action as indicated in the Action Economics [...]
At today's meeting of the Federal Open Market Committee, the federal funds rate target was raised to a range of 1.50%-1.75% from 1.25%-1.50%. The financial markets had expected today's action as indicated in the Action Economics Forecast Survey. The minutes to today's meeting stated, "The Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate."
The Fed's statement following the meeting began by focusing on how labor market strengthening has been accompanied by growing consumer and business investment, although the latter have moderated recently. At the same time, real GDP growth has picked up to 2.92% during the last three quarters versus 1.84% during all of 2016.
Price inflation, both total and excluding food & energy, has been below 2%. The Fed indicated that, while remaining low, market-based measures of inflation recently have increased. In fact, growth in the core CPI has accelerated during the last three and six months (see chart below).
Economic projections were strengthened. Real GDP growth estimates of 2.7% in 2018, 2.4% in 2019 and 2.0% in 2020 were raised from 2.5%, 2.1% and 2.0%, respectively. Core PCE price inflation estimates were changed to 1.9% in 2018, 2.1% in 2019 and 2.1% in 2020 from 1.9%, 2.0% and 2.0%, respectively. The projected unemployment rate was lowered to 3.8% in 2018, 3.6% in 2019 and 3.6% in 2020 from 3.9%, 3.9% and 4.0%, respectively.
The press release for today's FOMC meeting can be found here.
Haver's SURVEYS database contains the economic projections from the FOMC.
| Current | Last | 2017 | 2016 | 2015 | 2014 | |
|---|---|---|---|---|---|---|
| Federal Funds Rate Target | 1.50%-1.75% | 1.25%-1.50% | 1.00% | 0.40% | 0.13% | 0.09% |
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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