WASHINGTON — 2015 remains the year most members of the Federal Reserve board members and bank presidents expect monetary policy tightening, according to the Fed's latest summary of economic projections released Wednesday.
Twelve votes were cast for 2015 being the appropriate time to firm policy, with three votes cast for 2014 and two votes cast for 2016.
The range for the fed funds target at year end of 2015 ranges from two at 0.25% to one at 3.25%, with one seeing the rate at 0.50%, five at 0.75%, three at 1.00%, one at 1.25%, two at 1.50% and two at 3.00%. The range for the fed funds target at the end of 2016 ranges from one at 0.50% to one at 4.25%, with one at 1.00%, one at 1.50%, five at 1.75%, two at 2.00%, two at 2.50%, two at 2.75% and two at 4.00%.
Longer run, the target is seen between 3.25% (one participant) and 4.50% (three), with the majority (10) at 4.00%.
The quarterly projections for the long run were GDP growth seen at 2.2% to 2.5%, unemployment between 5.2% and 5.8% and PCE inflation at 2.0%. The quarterly projections for the long run in June were similar, with GDP growth seen at 2.3% to 2.5%, unemployment between 5.2% and 6.0% and PCE inflation at 2.0%.
GDP central tendency projections were lowered to 2.0% to 2.3% for this year (from a 2.3% to 2.6% range in the earlier survey), lowered to 2.9% to 3.1% growth for 2014 (from 3.0% to 3.5% in the June projections), and narrowed for 2015 to 3.0% to 3.5% (compared to 2.9% to 3.6%). The projection for 2016 is 2.5% to 3.3%, and there was not a 2016 projection in the earlier survey.
Unemployment central tendency projections for 2013 to 2015 were modified slightly. In 2013, the rate is seen at 7.1% to 7.3%, off from 7.2% to 7.3% in the prior projections, 6.4% to 6.8% in 2014, off from 6.5% to 6.8%, and 5.9% to 6.2% in 2015, off from 5.8% to 6.2%. The projection for 2016 is 5.4% to 5.9%.
PCE inflation projections were tweaked to 1.1% to 1.2% for 2013 (0.8% to 1.2% in the last report) and 1.3% to 1.8% next year (from 1.4% to 2.0%), and remained at 1.6% to 2.0% in 2015. Inflation was projected at 1.7% to 2.0% for 2016.
Core PCE inflation projections remained at 1.2% to 1.3% for 2013, tweaked to 1.5% to 1.7% next year (from 1.5% to 1.8%), and remained at 1.7% to 2.0% in 2015. The projection for 2016 is 1.9% to 2.0%
