The Fed cuts its forecasts for 2013 GDP, unemployment and inflation
- Sees 2013 at 2.3-2.6% compared to 2.3-2.8% prior
- Sees 2014 at 3.0-3.5% compared to 2.9% to 3.4%
- Sees 2013 unemployment rate at 7.2%-7.3% compared to 7.3%-7.5%
- Sees 2014 unemployment rate at 6.5-6.8% compared to 6.7%-7.0%
- Sees 2013 PCE inflation at 0.8%-1.2% compared to 1.3%-1.7%
- Sees 2014 PCE inflation at 1.4%-2.0% compared to 1.5%-2.0%
The downgrade in growth is less than I anticipated it would be. The unemployment forecast is rosy and that’s a big part of the reason why the dollar is rallying on the taper trade. What might be overlooked is the large downward change in the inflation forecast. Bullard dissented on disinflation worries.
