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FOMC More Optimistic On Medium-Term Outlook?

FED

Looking past the decision, the economic projections suggest that the COVID vaccine (and maybe some glimmers of light on the fiscal stimulus front?) have made the FOMC more optimistic on the medium-term growth outlook. 2020 real GDP -2.4% (from -3.7%), 2021 4.2% (4.0%), 2022 3.2% (from 3.0%). Unemp rate seen much lower, and inflation a bit higher too.

  • The growth aspect is somewhat interesting because all else being equal, usually an upgrade to one year (2020 in this case) means the next year is downgraded/flat due to base effects. That's not the case here, pointing to a more constructive FOMC outlook even after the stronger-than-expected data since the FOMC is taken into account.
  • Expect Powell to be asked about this at the presser.
  • The uncertainty gauges in the back of the SEP also point to slightly less uncertainty in projections than in previous months, though would take this with a grain of salt.
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