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Federal Reserve Economic Projections: Difference between revisions
Federal Reserve Economic Projections (view source)
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* Projections of inflation have also consistently missed the mark, most likely due to unexpected fluctuations in energy prices. | * Projections of inflation have also consistently missed the mark, most likely due to unexpected fluctuations in energy prices. | ||
* Since they were first reported in the SEP in 2012, the Committee’s projections of the target federal funds rate appear to have reflected participants’ projections of real GDP growth, inflation, and unemployment. | * Since they were first reported in the SEP in 2012, the Committee’s projections of the target federal funds rate appear to have reflected participants’ projections of real GDP growth, inflation, and unemployment. | ||
Although the projections in the SEP have proved to be consistently wrong, they do provide information about the FOMC’s implicit reaction function. Taking into account not only projection errors for inflation and unemployment but also the SEP reaction function’s estimate of the Committee’s systematic response to inflation and unemployment, it is clear that the Committee’s anticipated response to projected increases in inflation was the primary factor responsible for the missed projections. | |||
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== References == | == References == | ||