Statement here ($10 billion in additional tapering as expected). QE3 expected to end in October.
Here are the Policy Normalization Principles and Plans
As far as the “Appropriate timing of policy firming”, participant views were mostly unchanged (14 participants expect the first rate hike in 2015, and 2 in 2016 – so one participant moved from 2016 to 2015).
The FOMC projections for inflation are still on the low side through 2016.
Yellen press conference here.
On the projections, GDP for 2014 was revised down slightly, the unemployment rate was revised down again, and inflation projections were mostly unchanged. Note: These projections were submitted before the CPI report this morning.
| GDP projections of Federal Reserve Governors and Reserve Bank presidents | ||||
|---|---|---|---|---|
| Change in Real GDP1 |
2014 | 2015 | 2016 | 2017 |
| Sept 2014 Meeting Projections | 2.0 to 2.2 | 2.6 to 3.0 | 2.6 to 2.9 | 2.3 to 2.5 |
| June 2014 Meeting Projections | 2.1 to 2.3 | 3.0 to 3.2 | 2.5 to 3.0 | n.a. |
1 Projections of change in real GDP and inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.
The unemployment rate was at 6.1% in August, so the unemployment rate projection for Q4 2014 will probably be lowered slightly.
| Unemployment projections of Federal Reserve Governors and Reserve Bank presidents | ||||
|---|---|---|---|---|
| Unemployment Rate2 |
2014 | 2015 | 2016 | 2017 |
| Sept 2014 Meeting Projections | 5.9 to 6.0 | 5.4 to 5.6 | 5.1 to 5.4 | 4.9 to 5.3 |
| June 2014 Meeting Projections | 6.0 to 6.1 | 5.4 to 5.7 | 5.1 to 5.5 | n.a. |
2 Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.
As of July, PCE inflation was up 1.6% from July 2013, and core inflation was up 1.5%. The FOMC expects inflation to increase in 2015, but remain below their 2% target (Note: the FOMC target is symmetrical around 2%).
| Inflation projections of Federal Reserve Governors and Reserve Bank presidents | ||||
|---|---|---|---|---|
| PCE Inflation1 |
2014 | 2015 | 2016 | 2017 |
| Sept 2014 Meeting Projections | 1.5 to 1.7 | 1.6 to 1.9 | 1.7 to 2.0 | 1.9 to 2.0 |
| June 2014 Meeting Projections | 1.5 to 1.7 | 1.5 to 2.0 | 1.6 to 2.0 | n.a. |
Here are the FOMC’s recent core inflation projections:
| Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents | ||||
|---|---|---|---|---|
| Core Inflation1 |
2014 | 2015 | 2016 | 2017 |
| Sept 2014 Meeting Projections | 1.5 to 1.6 | 1.6 to 1.9 | 1.8 to 2.0 | 1.9 to 2.0 |
| June 2014 Meeting Projections | 1.5 to 1.6 | 1.6 to 2.0 | 1.7 to 2.0 | n.a. |