Federal Reserve Economic Projections: What Are They Good For?

Federal Reserve Economic Projections: What Are They Good For? Brookings Institution. Ben S. Bernanke. November 28, 2016

Four times each year, just prior to a Federal Open Market Committee (FOMC) meeting, the nineteen FOMC participants (seven Board governors when there are no vacancies, 12 Reserve Bank presidents) submit projections for four key economic variables—real output growth, the unemployment rate, overall inflation, and core inflation (excluding prices of food and energy)—and for short-term interest rates.[1] Projections cover the current year and up to three additional years (so, for example, the projections made in September 2016 are for full year 2016 as well as for 2017, 2018, and 2019). Projections are also made for the “long run” values of the variables—the values to which the variables would be expected to converge over time if, hypothetically, there were no new shocks to the economy. Importantly, projections are conditioned on each participant’s individual view of what would be “appropriate” monetary policy, defined as the policy that the individual believes would be most likely to help achieve the Fed’s inflation and employment objectives. [Note: contains copyrighted material].

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