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FOMC Projections and Press Conference

Statement here.

Fed Chair Powell press conference video here starting at 2:30 PM ET.

Here are the projections. In March, most participants expected rates to remain at the current level through 2023. Now, most participants expect around two rates hikes in 2023.

Note that real GDP increased 6.4% annualized in Q1.   And forecasts are for GDP to increase close to 10% in Q2 and Q3.

So GDP was revised up for 2021.

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date 2021 2022 2023
June 2021 6.8 to 7.3 2.8 to 3.8 2.0 to 2.5
Mar 2021 5.8 to 6.6 3.0 to 3.8 2.0 to 2.5

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 5.8% in May.

As people reenter the labor force – pushing up the participation rate – the improvement in the unemployment rate will likely slow.

The unemployment rate was revised up slightly for 2021.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date 2021 2022 2023
June 2021 4.4 to 4.8 3.5 to 4.0 3.2 to 3.8
Mar 2021 4.2 to 4.7 3.6 to 4.0 3.2 to 3.8

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

As of April 2021, PCE inflation was up 3.6% from April 2020. There was some base effect (since PCE inflation declined last year in the early months of the pandemic), but there was a clear pickup in inflation.

The projections for inflation were revised up and the FOMC sees inflation solidly above target in 2021.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date 2021 2022 2023
June 2021 3.1 to 3.5 1.9 to 2.3 2.0 to 2.2
Mar 2021 2.2 to 2.4 1.8 to 2.1 2.0 to 2.2

PCE core inflation was up 3.1% in April year-over-year.

Projections for core inflation were revised up.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date 2021 2022 2023
June 2021 2.9 to 3.1 1.9 to 2.3 2.0 to 2.2
Mar 2021 2.0 to 2.3 1.9 to 2.1 2.0 to 2.2

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