Fed to provide policy rate forecast

I had been thinking that the European crisis would focus minds at the Fed, and that we may therefore have seen an extension of their commitment to keep the fed funds rate at (essentially) zero for the next few years following their 13 Dec meeting.

As it turned out, I was wrong about that — there was no extended forecast following the December 13 meeting.

However, the minutes of the Dec meeting show that events in Europe did focus minds: we get our first crop of forecasts following the Jan 24-25 meeting (with the refreshed inflation, gap and unemployment forecasts).

My own forecast is that the Fed’s first move will be in late 2015. The forecasts won’t run that far, so the median is likely to show the funds rate at 0-25bps for the entire projection period.

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