FOMC Projections and Press Conference

Fed Chair Powell press conference video here or on YouTube here, starting at 2:30 PM ET.

Here are the projections. Projections of the neutral Fed Funds rate increased again!

In June, the FOMC participants’ midpoint of the target level for the federal funds rate was at 5.625% at the end of 2023. The FOMC participants’ midpoint of the target range is now closer to 5.5% and declines to 5.125% in 2024.

The BEA reported real GDP increased at a 2.1% annual rate in Q2, after increasing at a 2.0% annual rate in Q1. And real GDP is increasing around 3.0% annualized in Q3. Even with slower growth in Q4 – partially due to the likely government shutdown, the UAW strike, student loan payments, and higher oil prices, the FOMC projections for year-over-year growth in Q4 2023 was revised up sharply.

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date202320242025
Sept 20231.9 to 2.21.2 to 1.81.6 to 2.0 June 20230.7 to 1.20.9 to 1.51.6 to 2.0

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 3.8% in August. The FOMC’s unemployment rate projection for Q4 was revised down.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date202320242025
Sept 20233.7 to 3.93.9 to 4.43.9 to 4.3
June 20234.0 to 4.34.3 to 4.64.3 to 4.6

2 Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of July 2023, PCE inflation increased 3.3 percent year-over-year (YoY), up from 3.0 percent YoY in June, and down from the recent peak of 7.0 percent in June 2022. Projections for PCE inflation were mostly unchanged.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date202320242025
Sept 20233.2 to 3.42.3 to 2.72.0 to 2.3June 20233.0 to 3.52.3 to 2.82.0 to 2.4

PCE core inflation increased 4.2 percent YoY, up from 4.1 percent in June, and down from the recent peak of 5.4 percent in February 2022. This includes PCE measure of shelter that was up 7.8% YoY in July (even though asking rents are soft). Core PCE inflation likely declined to around 3.8% in August, and the FOMC revised down their projections.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date202320242025
Sept 20233.6 to 3.92.5 to 2.82.0 to 2.4
June 20233.7 to 4.22.5 to 3.12.0 to 2.4