FOMC Forecast revisions
FOMC Forecast revisions, to be released Wednesday June 19 with the FOMC statement, will reveal the extent to which the Fed is willing to resist market pressure to mark down their Fed funds rate assumptions in the dot-plot, and their economic forecasts as well. Analysts expect the new dot plot projections to show no change in the target rate in either 2019 or 2020, versus a median prior assumption of a quarter point hike in 2020. Some new estimates will likely show a rate cut this year (Bullard may even dissent against an unchanged stance), versus prior estimates that showed a "hard deck" at the current 2.4% rate. The estimated longer run rates should be trimmed as well. Prior Fed GDP estimates low-balled the outlook for 2019 in our view, and analysts see room for hikes in the lower-end estimates despite renewed trade war fears. The current 2019 GDP central tendency to 1.9%-2.2% is skewed below our own 2.4% forecast. The Fed's PCE chain price estimates for 2019 are poised to be lowered, given current central tendencies of 1.8%-1.9% for the headline and 1.9%-2.0% for the core, versus our own respective estimates of 1.7% and 1.8%. The 2019 jobless rate central tendency could remain at 3.6%-3.8%, versus the current 3.6%. page for a table of our assumptions for the Fed's revised forecasts.