Global| Mar 18 2015FOMC Reinforces its Expectation for Moderate Economic Growth and Low Inflation
by:Tom Moeller
|in:Economy in Brief
Summary
At today's meeting of the Federal Open Market Committee, the Fed indicated its continued expectation for moderate economic growth and improving labor market conditions. It stated that consumer spending was benefitting from the decline [...]
At today's meeting of the Federal Open Market Committee, the Fed indicated its continued expectation for moderate economic growth and improving labor market conditions. It stated that consumer spending was benefitting from the decline in oil prices; business spending was advancing but residential investment had weakened. Focusing on the labor market, the Fed indicated that underutilization of resources "continued to diminish."
Inflation was viewed as under control, helped by the decline in oil prices. Moreover, inflation compensation remained low and "longer-term inflation expectations remained stable." The Fed's long-run inflation goal is 2 percent.
The risks to the business outlook were viewed as balanced. GDP growth of 2.5% during 2015 and 2016 was expected, then diminishing to 2.2% in 2017. PCE inflation of 0.70% this year was expected, then rising to 1.80% next year and 1.95% in 2017, with moderate increases in core pricing power. The unemployment rate was expected to steadily decline to 4.95% by the end of 2017.
As a result of these views, the Fed elected to leave its target for the federal funds rate at 0 to 1/4 percent.
The press release for today's FOMC meeting can be found here.
The backdrop to today's meeting was a recent pickup in M2 growth to 6.5% from its October low of 5.1%, but a decline the monetary base of 2.3% y/y.
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.
