Thirteen of the sixteen members of the Federal Reserve Board expect next year to be the appropriate time for policy tightening, with a range of expectations for rates between 0.25% and 3.00% at the end of 2015, according to the Fed's latest summary of economic projections released Wednesday.
Two of the three other Fed participants see the rates rising in 2016 and one believes rates should go up to 1% this year.
The range for the fed funds target at year end of 2015 includes two at 0.25% to one at 3.00%, with two seeing the rate at 0.50%, two at 0.75%, five at 1.00%, one at 1.25%, one at 1.50%, one at 2.00%%, and one at 2.25%. The range for the fed funds target at the end of 2016 is one at 0.75% to one at 4.25%, with one at 1.25%, two at 1.75%, three at 2.00%, two at 2.75%, two at 2.25%, one each at 2.50%, 3.00%, 3.50%, and 4.00%.
Longer run, the target is seen between 3.50% (four participants) and 4.25% (two), with the majority (8) at 4.00%.
The quarterly projections for the long run GDP growth seen at 2.2% to 2.3%, unemployment between 5.2% and 5.6% and PCE inflation at 2.0%. The quarterly projections for the long run in December were similar.
GDP central tendency projections were cut to 2.8% to 3.0% growth for 2014 (from 2.8% to 3.2% in the December projections), and narrowed for 2015 to 3.0% to 3.2% (compared to 3.0% to 3.4%). The projection for 2016 were sliced to 2.5% to 3.0%, compared to 2.5% to 3.2%.
Unemployment central tendency projections for 2014 were modified to 6.1% to 6.3% from 6.3% to 6.6%, and to 5.6% to 5.9% in 2015, off from 5.8% to 6.1%. The projection for 2016 is 5.2% to 5.6%, lowered from 5.3% to 5.8%.
PCE inflation projections were tweaked to 1.5% to 1.6% this year (from 1.4% to 1.6%), and kept at 1.5% to 2.0% for 2015. Inflation remains projected at 1.7% to 2.0% for 2016.
Core PCE inflation projections remained 1.4% to 1.6% this year, and tweaked to 1.7% to 2.0% from 1.6% to 2.0% in 2015. The projection for 2016 stayed 1.8% to 2.0.
