The Federal Open Market Committee will issue its policy statement and quarterly economic projections tomorrow at 2 p.m. in Washington. Federal Reserve Chair Janet Yellen will then hold a news conference at 2:30 pm. Here are the expected highlights.
--Rate policy: no change from the current 0.25% upper bound
--Economic projections: March GDP 2.3-2.7%, Unemployment 5.0-5.2%, PCE inflation 0.6-0.8%, Core PCE 1.3-1.4%. While the new estimates for the year will incorporate the -0.7% 1st quarter GDP that was not available in March, the decline could be balanced by the subsequent improvement in statistics.
Rate projection: March 0.625% by year end, implying two 0.25% increases. As with the economic forecasts any change here will be directly linked to the potential September move.
FOMC Statement: The first paragraph contains the Fed's assessment of the economy, 'data dependent', 'economic growth slowed...reflecting transitory factors', 'household spending declined' and the second covers its expectations, 'economic activity will expand at a moderate pace'. Any change in language reflects a different assessment of the economy and its course. If activity has picked up since the last FOMC statement on April 29th it will be portrayed here.
Chief Market Strategist
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