Most analysts expect the FOMC to “pause” raising rates at the meeting this week.
emphasis addedAnd from Goldman Sachs economists: The FOMC is likely to pause at its June meeting next week to let the haze clear before it considers another rate hike. The Fed leadership has signaled that it sees pausing as the prudent course because uncertainty about both the lagged effects of the rate hikes it has already delivered and the impact of tighter bank credit increases the risk of accidentally overtightening. … We expect the median dot to show one additional hike to a new peak of 5.25-5.5%, in line with our own forecast.
GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Mar 20230.0 to 0.81.0 to 1.51.7 to 2.1
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 3.7% in May. To reach the mid-point of the FOMC projections for Q4 2023, the economy would likely have to lose over 1 million jobs by Q4. The FOMC will likely lower their unemployment rate projection for Q4.
Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Mar 20234.0 to 4.74.3 to 4.94.3 to 4.8
2 Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.
As of April 2023, PCE inflation increased 4.4 percent year-over-year (YoY), up from 4.2 percent YoY in March, and down from the recent peak of 7.0 percent in June 2022. The projection of PCE inflation for Q4 2023 will might be revised up slightly, however May and June 2022 PCE inflation was very high, and YoY PCE inflation will likely decrease sharply over the next two months.
Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Mar 20233.0 to 3.82.2 to 2.82.0 to 2.2
PCE core inflation increased 4.7 percent YoY, up from 4.6 percent in March, and down from the recent peak of 5.4 percent in February 2022.; This remains a concern for the FOMC, however this includes shelter that was up 8.4% YoY in April (even though asking rents are mostly unchanged YoY).
Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Mar 20233.5 to 3.92.3 to 2.82.0 to 2.2