Fed Outlook Forecast & Regressing Minutes, Enough Ammo For Bulls & Bears Alike

The FOMC gave its first of its quarterly outlooks for the years ahead:

• The FOMC now sees slower GDP growth, raised unemployment, and somewhat reduced inflation. 
• Real GDP Growth expectations have been shaved to 1.8%-2.5% from 2.5%-2.75% for 2008, and 2.3%-2.7% for 2009. 
• It now forecasts 1.8% to 2.1% for 2008 inflation on PCE measurement, based partly on flattening oil prices.
• It sees unemployment at 4.8% to 4.9% next year, slightly up from 4.75% previously forecast.

As far as the minutes from the October 30 to 31 meeting,  24/7 Wall St.’s take is that "October vote was a close call" and additional insurance… that isn’t indicative of a FOMC hellbent on cutting rates.

• You can see the Minutes here.

24/7 Wall St. has cautioned against a FOMC forecasting for a myriad of reasons.  Academics speaking but not making an action generates that much more volatility in the credit and equity markets.  The good news is that if you are an active trader, you’ll get three more opportunities to make "Fade the Fed" trades.

Jon C. Ogg
November 20, 2007