Federal Reserve officials, in a new and expanded forecast, expect the nation's economy to grow sluggishly next year and see risks of an even worse performance. They also expect food and energy prices to continue putting upward pressure on inflation, but say underlying inflation is now, and will remain, within the target range implied by their new forecast...
The details of the forecasts, released yesterday, suggest officials remain open to the need to cut rates again in coming months. A different message comes from the accompanying summary of the FOMC's Oct. 30-31 meeting, which ended with a decision to cut the target for the Fed's key interest rate to 4.5% from 4.75%. The minutes say the decision to cut rates, as opposed to leaving them unchanged, was a "close call."...
The minutes, and an accompanying study by staff economists David Reifschneider and Peter Tulip, emphasize that projections are subject to a lot of forecasting error, and those errors grow the further the forecast goes into the future. Based on the track record of forecasts, they say there's a 70% chance growth will be 1.3 percentage points higher or lower than the FOMC forecasts next year, and 1.4 points higher or lower in subsequent years.from the Wall Street Journal
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