16 Jun 2015
FOMC Meeting: Economic Forecasts – Nomura
FXStreet (Barcelona) - Economists at Nomura, offer their GDP, Unemployment and Inflation forecast as expected by the Fed in the crucial June FOMC Meeting.
Key Quotes
Economic forecasts
“GDP forecast: The weak economic growth earlier this year should lead the FOMC participants to reduce their GDP projections for 2015. We expect the central tendency of the real GDP forecast for 2015 to be revised lower to a range of 2.0-2.3% from 2.3-2.7% previously. However, beyond 2015, FOMC participants had already revised down their growth projections aggressively at the previous meeting due in part to the stronger US dollar. Thus, we do not look for any substantial revisions to growth projections for 2016 through 2017. On the longer-run projections for GDP growth, we do not think that its central tendency will move in either direction.”
“Unemployment forecast: Since the March FOMC meeting, the unemployment rate has stopped trending lower. Also, the labor force participation rate has inched up during the same period. On the back of those recent developments, we think there is some chance that several participants could revise up their forecasts for the unemployment rate.”
“Inflation forecast: Given that the FOMC participants had revised down their inflation forecasts for 2015 aggressively at the March meeting, we do not think that their inflation forecast is likely to be revised substantially. That being said, the near-term forecast for the headline PCE inflation might be revised slightly higher in reaction to a partial rebound in crude oil prices. On core inflation, the recent pickup in wage inflation might brighten their outlook for core PCE inflation for 2015 and 2016.”
Key Quotes
Economic forecasts
“GDP forecast: The weak economic growth earlier this year should lead the FOMC participants to reduce their GDP projections for 2015. We expect the central tendency of the real GDP forecast for 2015 to be revised lower to a range of 2.0-2.3% from 2.3-2.7% previously. However, beyond 2015, FOMC participants had already revised down their growth projections aggressively at the previous meeting due in part to the stronger US dollar. Thus, we do not look for any substantial revisions to growth projections for 2016 through 2017. On the longer-run projections for GDP growth, we do not think that its central tendency will move in either direction.”
“Unemployment forecast: Since the March FOMC meeting, the unemployment rate has stopped trending lower. Also, the labor force participation rate has inched up during the same period. On the back of those recent developments, we think there is some chance that several participants could revise up their forecasts for the unemployment rate.”
“Inflation forecast: Given that the FOMC participants had revised down their inflation forecasts for 2015 aggressively at the March meeting, we do not think that their inflation forecast is likely to be revised substantially. That being said, the near-term forecast for the headline PCE inflation might be revised slightly higher in reaction to a partial rebound in crude oil prices. On core inflation, the recent pickup in wage inflation might brighten their outlook for core PCE inflation for 2015 and 2016.”