FOMC Projections: GDP Revised Down, Inflation Revised Up

Calculated Risk03-19

Statement here. Fed Chair Powell press conference video here or on YouTube here, starting at 2:30 PM ET. Here are the projections.  


In December, the FOMC participants’ midpoint of the target level for the federal funds rate was around 3.875% at the end of 2025 (3.6%-4.1%) and the long run range was 2.8% to 3.6%.  The FOMC participants’ midpoint of the target range is now at 4.0% at the end of 2025 (3.9%-4.4%) and the long run range is 2.6% to 3.6%.  

It appears growth slower than expected in Q1 2025, and 2025 GDP growth was revised down.

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date202520262027
Mar 20251.5 to 1.91.6 to 1.91.6 to 2.0
Dec 20241.8 to 2.21.9 to 2.11.8 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 4.1% in February.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date202520262027
Mar 20254.3 to 4.44.2 to 4.54.1 to 4.4
Dec 20244.2 to 4.54.1 to 4.44.0 to 4.4
2 Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of January 2025, PCE inflation increased 2.5 percent year-over-year (YoY).  The projections for Q4 2025 PCE inflation were revised up.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date202520262027
Mar 20252.6 to 2.92.1 to 2.32.0 to 2.1
Dec 20242.3 to 2.62.0-2.22.0

PCE core inflation increased 2.6 percent YoY in January and is expected to be up 2.7 percent YoY in February.  The projections for core PCE inflation Q4 2025 were revised up.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date202520262027
Mar 20252.7 to 3.02.1 to 2.42.0 to 2.1
Dec 20242.5 to 2.72.0-2.32.0
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment