A large majority of the Federal Open Market Committee continues to view 2015 as the appropriate time to tighten monetary policy, and believes GDP growth will be substantially up by then, according to the Fed's latest summary of economic projections released Wednesday.
About half the committee projects the Fed funds rate, currently at zero to 0.25%, will have to come up to at least 1% by 2015, the projections show. In addition, all but one member said there would need to be some policy tightening in 2015. The rate should settle between 4% and 4.5% in the long term, most members concluded.
The projections are not much changed from the ones released in December. The central tendency projections, discounting the three highest and three lowest outliers, show real GDP growing by 2.3% to 2.8% this year, with the pace picking up to between 2.9% and 3.4% in 2014 and reaching 2.9% to 3.7% growth by 2015.
The group sees unemployment trending steadily lower, holding between 7.3% and 7.5% in 2013 and perhaps falling as low as 6% by 2015.
Inflation rate projections range between 1.5% and 2.1% until 2015.