FOMC Forecast revisions
FOMC Forecast revisions to be released Wednesday with the Fed's announcement should reveal boosts in the 2018 GDP estimates, which are skewed below both our estimates and most market forecasts, alongside with a possible trimming in the high-end estimates for the 2018 core PCE chain price gain. Analysts otherwise expect few tweaks to the 2019-2020 forecasts. The extension of the forecast horizon to 2021 will likely reveal estimates that parallel the 2020 forecasts, though the inflation estimates should converge on the long-run 2.0% forecasts. The jobless rate estimates bracket our own projection, and reported rates have been roughly unchanged since the June meeting, so analysts so no need for Fed tweaks. The GDP central tendency for 2018 sits at 2.7%-3.0%, versus our own forecast of 3.2%, and analysts expect hikes in individual estimates of 0.2% to leave comparable boosts in the central tendencies and ranges. The dot plot should still show four hikes in 2018, with a boost in the low-end estimates to show a big majority likelihood of one more 2018 hike after September. There is risk of some trimming in future year Fed funds rate ranges, as the Fed becomes more cautious as rates approach "neutral", and as trade conflicts continue. page for a table of our assumptions for the Fed's revised forecasts.