Fed staff forecasts from FOMC minutes

(Reuters) - The following are the Federal Reserve's staff forecasts as contained in the minutes of recent Federal Open Market Committee meetings:

DEC. 13-14 FOMC: Minutes released on Jan. 4, 2017:

"In the U.S. economic projection prepared by the staff for the December FOMC meeting, the near-term forecast was little changed from the projection prepared for the November meeting. Real GDP growth in the second half of 2016 was still expected to be faster than in the first half. The staff’s forecast for real GDP growth over the next several years was slightly higher, on balance, largely reflecting the effects of the staff’s provisional assumption that fiscal policy would be more expansionary in the coming years. These effects were substantially counterbalanced by the restraint from the higher assumed paths for longer-term interest rates and the foreign exchange value of the dollar. The staff projected

that real GDP would expand at a modestly faster pace than potential output in 2017 through 2019. The unemployment rate was forecast to edge down gradually, on net, and to continue to run below the staff’s estimate of its longer-run natural rate through the end of 2019; the path for the unemployment rate was a little lower than in the previous projection.

"The near-term forecast for consumer price inflation was somewhat higher than in the previous projection, reflecting recent increases in energy prices. Beyond the near term, the inflation forecast was little revised. The staff continued to project that inflation would edge up over the next several years, as food and energy prices along with the prices of non-energy imports were expected to begin steadily rising in 2017. However, inflation was projected to be marginally below the Committee’s longer-run objective of 2 percent in 2019.

"The staff viewed the uncertainty around its projections for real GDP growth, the unemployment rate, and inflation as similar to the average of the past 20 years. The risks to the forecast for real GDP were seen as tilted to the downside, reflecting the staff’s assessment that monetary

policy appeared to be better positioned to offset large positive shocks than substantial adverse ones. In addition, the staff continued to see the risks to the forecast from developments abroad as skewed to the downside.

Consistent with the downside risks to aggregate demand, the staff viewed the risks to its outlook for the unemployment rate as tilted to the upside. The risks to the projection for inflation were seen as roughly balanced.

The downside risks from the possibility that longer-term inflation expectations may have edged lower or that the dollar could appreciate more than anticipated were seen as roughly counterbalanced by the upside risk that inflation could increase more than expected in an economy that was projected to continue operating above its long-run potential."

NOV. 1-2 FOMC: Minutes released on Nov. 23:

"In the U.S. economic projection prepared by the staff for the November FOMC meeting, the pace of real GDP growth was forecast to be faster over the second half of this year than in the first half, as business investment was anticipated to turn up and the drag from inventory investment was expected to end. However, the forecast for the second half was lower than in the September projection, primarily reflecting softer-than-expected

data on consumer spending. The staff’s forecast for real GDP growth over the next couple of years was also slightly lower than in the previous projection, primarily reflecting the effects of higher assumed paths for the dollar and for crude oil prices. Nonetheless, the staff

projected that real GDP would expand at a modestly faster pace than potential output in 2017 and 2018, supported by solid gains in consumer spending and, to a lesser degree, by pickups in both residential and business investment; in 2019, GDP was projected to expand at the same rate as its potential. The unemployment rate was forecast to edge down gradually through the end of 2018 and then flatten out in 2019; the path for the unemployment rate was a little higher than in the previous projection but was still projected to run below the staff’s estimate of its longer-run natural rate.

"The near-term forecast for consumer price inflation was somewhat higher than in the previous projection, reflecting incoming data on core prices and energy prices.

Beyond the near term, the inflation forecast was generally little revised. The staff continued to project that inflation would increase over the next several years, as food and energy prices along with the prices of non-energy imports were expected to begin rising steadily this year. However, inflation was projected to be marginally below the Committee’s longer-run objective of 2 percent in 2019.

"The staff viewed the uncertainty around its projections for real GDP growth, the unemployment rate, and inflation as similar to the average of the past 20 years. The risks to the forecast for real GDP were seen as tilted to the downside, reflecting the staff’s assessment that both

monetary and fiscal policy appeared to be better positioned to offset large positive shocks than adverse ones.

In addition, the staff continued to see the risks to the forecast from developments abroad as skewed to the downside. Consistent with the downside risks to aggregate demand, the staff viewed the risks to its outlook for the unemployment rate as tilted to the upside. The risks to the projection for inflation were seen as roughly balanced.

The possibility that longer-term inflation expectations may have edged down was roughly counterbalanced by the risks that somewhat firmer inflation this year could be more persistent than expected, particularly in an economy that was projected to continue operating above its long-run potential."

SEPT 20-21 FOMC: Minutes released on Oct. 12:

"In the U.S. economic projection prepared by the staff for the September FOMC meeting, the forecast for real GDP growth in 2016 through 2019 was little changed from the one presented in July. The pace of real GDP growth was forecast to be faster over the second half of this year than in the first half, primarily reflecting a modest increase in the rate of growth of private domestic final purchases and a sizable turnaround in inventory investment.

The staff continued to project that real GDP would expand at a modestly faster pace than potential output in 2016 through 2019, supported primarily by increases in consumer spending and, to a lesser degree, by somewhat faster growth in business investment beginning next year. (The staff slightly lowered its assumption for potential output growth over the medium term and in the longer run.) The unemployment rate was forecast

to remain flat over the remainder of this year and then to gradually decline through the end of 2019; over this period, the unemployment rate was projected to run below the staff’s estimate of its longer-run natural rate.

"The forecast for consumer price inflation was essentially unchanged from the previous projection. The staff continued to project that inflation would increase over the next several years, as food and energy prices along with the prices of non-energy imports were expected to begin steadily rising this year. However, inflation was projected to be marginally below the Committee’s longer-run objective of 2 percent in 2019.

"The staff viewed the uncertainty around its projections for real GDP growth, the unemployment rate, and inflation as similar to the average of the past 20 years. The risks to the forecast for real GDP were seen as tilted to the downside, reflecting the staff’s assessment that both

monetary and fiscal policy appeared to be better positioned to offset large positive shocks than adverse ones.

In addition, the staff continued to see the risks to the forecast from developments abroad as skewed to the downside. Consistent with the downside risks to aggregate demand, the staff viewed the risks to its outlook for the unemployment rate as tilted to the upside. The risks to the projection for inflation were still judged as weighted somewhat to the downside, partly reflecting the possibility that longer-term inflation expectations may have edged down."

JULY 26-27 FOMC: Minutes released on Aug. 17:

   “In the U.S. economic projection prepared by the staff for the July FOMC meeting, real GDP growth was estimated to have picked up in the second quarter, consistent with the forecast in June. However, the projected step-up in real GDP growth over the second half of this year was marked down a little, partly reflecting softer news on construction. The forecast for real GDP growth in 2017 and 2018 was little revised, as the positive effects of a slightly lower assumed path for interest rates and a stronger trajectory for household wealth were mostly offset by the restraint from a weaker outlook for foreign GDP growth and a slightly stronger path for the foreign exchange value of the dollar. The staff continued to forecast that real GDP would expand at a modestly faster pace than potential output in 2016 through 2018, supported primarily by increases in consumer spending and, to a lesser degree, by a projected pickup in business and residential investment. The unemployment rate was expected to remain flat over the second half of this year and then to gradually decline through the end of 2018. Over this period, the unemployment rate was projected to run somewhat below the staff’s estimate of its longer-run natural rate.

   “The staff’s forecast for consumer price inflation over the second half of 2016 was a little lower than in the previous projection, as recent declines in crude oil prices were expected to hold down consumer energy prices. Thereafter, the forecast for inflation was essentially unrevised. The staff continued to project that inflation would increase over the next several years, as energy prices and the prices of non-energy imports were expected to begin steadily rising this year and as resource utilization was expected to tighten further. However, inflation was still projected to be slightly below the Committee’s longer-run objective of 2 percent in 2018.

“The staff viewed the uncertainty around its July projections for real GDP growth, the unemployment rate, and inflation as similar to the average of the past 20 years. The risks to the forecast for real GDP were seen as tilted to the downside, reflecting the staff’s assessment that both monetary and fiscal policy appeared to be better positioned to offset large positive shocks than adverse ones. In addition, the staff continued to see the risks to the forecast from developments abroad as skewed to the downside. Consistent with the downside risks to aggregate demand, the staff viewed the risks to its outlook for the unemployment rate as tilted to the upside. The risks to the projection for inflation were still judged as weighted to the downside, reflecting the possibility that longer-term inflation expectations may have edged lower.”