FOMC Forecast revisions
FOMC Forecast revisions released in the SEP alongside the FOMC statement revealed downward GDP revisions across the forecast horizon and upward jobless rate adjustments that depict a notably weaker growth trajectory than estimated in September, even though the figures were apparently less dovish than markets had hoped. Interestingly, even the 2018 GDP forecast range was nudged lower, to 3.0%-3.1%, leaving all the estimates below the emerging 3.2% Q4/Q4 climb. Analysts also saw the expected big downward bumps in headline and core PCE chain price estimates for 2018 that incorporate both the November drop in oil prices and the recent weakening in reported core prices, with a further trimming in the inflation estimates across the forecast horizon. The dot plot exhibited the expected dovish shift that now leaves two tightenings in the 2019 median estimate rather than three, with shifts in the individual estimates that imply one or more fewer tightenings across the forecast range, though with an upward bump in the most dovish forecasts to account for the December rate hike. For longer run central tendencies, the funds rate was trimmed to 2.5%-3.0% from 2.8%-3.0%, while the jobless rate was trimmed to 4.2%-4.5% from 4.3%-4.6%. page for a table of our assumptions for the Fed's revised forecasts.