–Two More Participants See First Upward Rate Move in 2015

WASHINGTON (MNI) – The Federal Reserve Board and all the regional
bank presidents Wednesday delivered the expected downspeeding of growth
and slowed the rate of jobs improvement in the latest summary of
economic projections, while also seeing inflation only slightly
dampened.

The central tendency outlook, which excludes the three highest and
lowest projections, is for GDP this year to be no more than 2.4%,
instead of the previous high end of the range set in April of 2.9%.

While this year’s GDP projection is now 1.9% to 2.4%, revised down
from 2.4% to 2.9% in the previous outlook, next year is modified less:
for 2013, the range is 2.2% to 2.8% instead of 2.7% to 3.1%.

The unemployment rate is now seen, fourth quarter to fourth
quarter, hitting 8.0% to 8.2% this year instead of 7.8% to 8.0%
previously. Next year unemployment could still be as much as 8.0%
instead of the previous top of the range of 7.7%, in the Fed’s view.

The range for personal consumption expenditure inflation was
trimmed and widened to 1.2% to 1.7% this year, instead of 1.9% to 2.0%.
Next year PCE inflation is seen ranging from 1.5% to 2.0%, not much
changed from the previous 1.6% to 2.0% range.

Core PCE inflation was revised less, to 1.7% to 2.0% this year
instead of 1.8% to 2.0%. Next year the core rate is seen up 1.6% on the
low end instead of 1.7%, and again 2.0% on the high end.

The Fed also provided the range for the same variables including
all the revised outlooks, and they were all wider than the central
tendency outlooks, except for this year’s core rate of inflation, which
remained 1.7% to 2.0%.

For 2014, the central tendency projections showed generally smaller
revisions than in the prior two years except for that of the unemployment
rate, raised by three-tenths to 7.0% to 7.7%.

In accompanying charts, the anticipated timing of monetary policy
tightening still showed a peak for the first move upward in 2014, with
seven survey participants, while six now expect 2015. In April, only
four participants were expecting a move in 2015.

For this year and next, only three participants anticipated the
first move upward that soon.

In another chart, with each participant’s estimate of rate levels,
most were clustered below 1% in 2014, but one was as high at 3.0%.

** MNI Washington Bureau: 202-371-2121 **

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