June 15, 2023 (MLN): In conjunction with the Federal Open Market Committee (FOMC) meeting held on June 13–14, 2023, meeting participants submitted their projections of the most likely outcomes for real gross domestic product (GDP) growth, the unemployment rate, and inflation for each year from 2023 to 2025 and over the longer run, a press issued by the Federal Reserve showed today.
Each participant’s projections were based on information available at the time of the meeting, together with her or his assessment of appropriate monetary policy, including a path for the federal funds rate and its longer-run value, and assumptions about other factors likely to affect economic outcomes.
The longer-run projections represent each participant’s assessment of the value to which each variable would be expected to converge, over time, under appropriate monetary policy and in the absence of further shocks to the economy.
Fed Chair Jerome Powell
The Fed is committed to reducing high inflation to the 2% goal. Monetary policy has been tightened significantly, with a 5% increase in the policy interest rate and a reduction in securities holdings, Fed chair Jerome Powell stated in a press conference yesterday.
He stated that the effects of this tightening are yet to be fully felt.
The committee decided to keep the policy interest rate unchanged and continue reducing securities holdings due to the progress made, uncertain lags in monetary policy effects, and potential headwinds from credit tightening.
Economic growth has slowed, and consumer spending has picked up but the housing sector remains weak, and business investment is affected by higher interest rates and slower output growth.
The labor market is tight, with strong job gains but easing wage growth and declining job vacancies.
Inflation is above the 2% goal, however, efforts to bring it down are ongoing. Long-term inflation expectations remain anchored.
The Fed is attentive to the risks high inflation poses and remains committed to its objectives. The future path of interest rates will depend on economic and financial developments. Restoring price stability is crucial for achieving maximum employment and stable prices.
Economic projections of Federal Reserve Board members and Federal Reserve Bank presidents, under their individual assumptions of projected appropriate monetary policy, June 2023:
| Median (in percent) | ||||
|---|---|---|---|---|
| 2023 | 2024 | 2025 | Longer run | |
| Change in real GDP | 1 | 1.1 | 1.8 | 1.8 |
| March projection | 0.4 | 1.2 | 1.9 | 1.8 |
| Unemployment rate | 4.1 | 4.5 | 4.5 | 4 |
| March projection | 4.5 | 4.6 | 4.6 | 4 |
| PCE inflation | 3.2 | 2.5 | 2.1 | 2 |
| March projection | 3.3 | 2.5 | 2.1 | 2 |
| Core PCE inflation | 3.9 | 2.6 | 2.2 | |
| March projection | 3.6 | 2.6 | 2.1 | |
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Posted on: 2023-06-15T11:09:09+05:00
