by Calculated Risk on 6/12/2022 09:41:00 AM
Expectations are the FOMC will announce a 50bp rate increase in the federal funds rate at the meeting this week.
updated Summary of Economic Projections (SEP) and dot plot.
In the press conference, we expect Chair Powell to reiterate that labor market
momentum is still too strong, inflation remains a big problem, and that the Fed is
committed to restoring price stability. We don’t expect any concrete forward guidance
beyond the next meeting, with Powell noting a reassessment in the path of hikes in
September dependent on convincing signs that inflation is slowing. If asked about a
pause in September, he is likely to outright dismiss the idea.”
Wall Street forecasts are being revised down for 2022 due to the ongoing negative impacts from the pandemic and the war in Ukraine. So, GDP for 2022 will likely be revised down.
1 Projections of change in real GDP and inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.
The unemployment rate was at 3.6% in May. The question is: Will the slowdown in economic growth push up the unemployment rate? Or will the rate continue to decline? The projections for the unemployment rate will likely be mostly unchanged.
2 Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.
As of April 2022, PCE inflation was up 6.3% from April 2021. This was below the cycle high of 6.6%. Based on recent readings, inflation might stay elevated longer than expected. PCE inflation will likely be revised up for 2022.
PCE core inflation was up 4.9% in April year-over-year. This was below the cycle high of 5.3%. Core PCE inflation will also likely be revised up.