New Lower Fed Long-Term Targets: Employment, Inflation, GDP & Rates

The Fed is going to continue on its dual-mandate of inflation and employment as it stated that it will take a balanced approach to maintain price stability and to promote employment.  While inflation targets are being set at 2% longer-term, the Fed now sees lower growth, but sees a lower jobless rate with steady prices.

The core inflation (ex-food and energy) projections are:

• 1.5% to 1.8% in 2012
• 1.5% to 2.0% in 2013
• 1.6% to 2.0% in 2014

The headline inflation rate projections are as follows:

• 1.4% to 1.8% in 2012
• 1.4% to 2.0% in 2013
• 1.6% to 2.0% in 2014

For Jobless rate expectations, the new projections are as follows:

• 8.2% to 8.5% in 2012
• 7.4% to 8.1% in 2013
• 6.7% to 7.6% in 2014

Here is the U.S. GDP expectation ranges:

• 2.2% to 2.7% in 2012
• 2.8% to 3.2% in 2013
• 3.3% to 4.0% in 2014

Here is the expectation ranges for when the first rate hikes will come up:

• 2 of 17 officials: sometime in 2016
• 4 of 17 Officials: sometime in 2015
• 11 of 17 Officials: sometime in 2014 Or Later
• 3 of 17 Officials: sometime In 2013
• 3 of 17 Officials: sometime In 2012

JON C. OGG