FOMC Economic Projection Summary
By the end of 2024, five of the Fed's 18 members expect the Fed Funds Rate to be at or above the 2.5% neutral rate.
Median expectations in the summary of economic projections: All 18 Fed officials expect the Fed Funds Rate to rise from zero in 2022, compared to half in the September forecast.
- The Fed sees PCE inflation at 2.6% in 2022 (previous 2.2%), 2.3% in 2023, 2.1% in 2024.
- Core PCE inflation is expected to be 2.7% in 2022 (prev. 2.3%), 2.3% in 2023, and 2.1% in 2024, according to the Fed.
- Sees US GDP to increase 4.0% in 2022 (previous 3.8%), 2.2% in 2023, and 2.0% in 2024, with a median long-run prediction of 1.8% (previous 1.8%)
- Year-end unemployment in the United States is expected to be 3.5% in 2022 (prev. 3.8%), 3.5% in 2023, and 3.5% in 2024. The median long-run prediction is 4.0% (prev 4.0%)
- Fed's consensus forecast for the Fed Funds Rate, in the long run, is 2.5% (prev 2.5%).
- Fed's median forecast for the Federal Funds Rate at the end of 2023 is 1.6% (prev 1.0%)
- Fed policymakers expect three quarter-point rate hikes in 2022, three more rate hikes in 2023.
- Fed's median forecast for the Federal funds rate at the end of 2022 is 0.9% (previous 0.3%)
- Fed's median forecast for the Federal Funds Rate at the end of 2024 is 2.1% (prev 1.8%)
FOMC Statement Summary
Starting in mid-January, the Fed will double the present rate of bond tapering, indicating that a comparable rate of reductions will be appropriate in the coming months. We are ready to adjust the pace of purchases if the economy's outlook changes.
Fed instructs NY Fed markets desk to adjust open market purchases of Treasuries to $40 bln/month, $20 bln/month of MBS starting in mid-January.
We are ready to adjust the pace of purchases if the economy's outlook changes.
The pandemic's worst-affected industries have recovered in recent months, but COVID-19 continues to be an issue for them.
Fed: There are still risks to the economy, including new COVID variants.
Fed Fund Futures & OIS Swaps
- Fed OIS swaps show three quarter-point hikes priced for 2022.
- Fed Fund Futures suggest traders estimate a 74% chance of a Fed raise in April and a 100% chance in May following the Fed's statement.