Fed's new economic projections may come with a dose of maybe, maybe not
Business
Fed's new economic projections may come with a dose of maybe, maybe not
WASHINGTON (Reuters) - Updated economic projections from Federal Reserve officials this week are expected to show fewer interest rate cuts than policymakers anticipated three months ago, faster expected inflation, and slower growth, a pinpoint economic outlook that will carry the weight of the U.S. central bank's authority.
It may also come with what amounts to a consumer warning from Fed Chair Jerome Powell: Actual results may vary.
With their forecasts stymied last year by faster economic growth and lower inflation than expected, and now by higher inflation and slowing growth, Fed officials of late have supplemented discussion of their outlook with the top alternate paths they think the economy may follow.
Both a nod to what they don't know and a way to keep public expectations more fluid, it's a strategy Powell may well follow in his press conference after the end of a two-day policy meeting on Wednesday as a way to shift the center of attention from the new Summary of Economic Projections and its market-shaping plot of where officials think the policy interest rate is heading, with a focus on the median.
"I always emphasize the importance of a story ... that ties together in a coherent way the macro outlook and policy strategy," Larry Meyer, a former Fed governor who now heads consulting firm Monetary Policy Analytics, wrote last week. "The strength of the story ... depends on the degree of uncertainty, which has spiked of late. In that case, we should pay more attention to alternative scenarios."
