Financial Update (Fourth Quarter 2007)

FOMC to Produce More Economic Projections

FRB board roomThe Federal Open Market Committee (FOMC), the monetary policymaking arm of the Federal Reserve, announced in November that, as part of its ongoing commitment to improve the accountability and public understanding of monetary policy making, it will increase the frequency and expand the content of public economic projections made by Federal Reserve Board members and Reserve Bank presidents.

Since 1979, projections of economic growth, unemployment, and inflation have been published semiannually in the Federal Reserve’s Monetary Policy Report to Congress. Summaries of those semiannual projections have also been published in the minutes of FOMC meetings.

Projections will also look farther ahead
In the future, the FOMC will compile and release projections four times a year rather than twice. In addition, the projections will look ahead three years rather than two. FOMC meeting participants will now provide projections for overall personal consumption expenditures (PCE) inflation as well as for real gross domestic product (GDP) growth, the unemployment rate, and core PCE inflation, which strips out price fluctuations caused by the cost of food and energy. The FOMC will no longer project nominal GDP growth.

Press release off-site image
FOMC information off-site image
FOMC minutes from Oct. 30–31 off-site image

Forecasts to gain clarity
Summaries and explanations of the projections will be published along with the minutes of the FOMC meeting at which they were discussed. These descriptions will cover not only the outcomes that most meeting participants see as most likely but also the risks to the economic outlook and the range of views among policymakers.

The schedule for publication of projections will be approximately quarterly, starting with the minutes of the FOMC meeting of Oct. 30–31, which were released on Nov. 20. In 2008, projections by Fed governors and Reserve Bank presidents will be published with the minutes of the FOMC meetings scheduled for January, April, June, and October. The projections will continue to be described in the semiannual Monetary Policy Report to Congress.

November 29, 2007