The FOMC projections, central tendency:
The GDP growth projections were only marginally softer. Most notable was the decrease in the high end of the 2014 forecast. The unemployment rate projection fell in the near term, necessitated by the decline this year. But the 2014 projection was roughly the same. Inflation expectations were marginally softer, and notice that, within the central tendency, there are no projections above 2%. You need to move to the overall range to get an upper-bound projection of 2.2%, still within the Fed's now explicit margin of error of 50bp.
Another point: There is no indication here of a fundamental change regarding the rate of potential output growth or the natural rate of unemployment in the longer-run. For now, the speed-limits remain the same.
The expected date of first tightening is still reported:
Most participants (13, instead of 12 like in September) expect the first tightening in 2015. Notice that this is consistent with unemployment falling below 6.5% that year. The Fed thinks that the unemployment rate will hit its threshold first. Also note that this reinforces the point that the shift to thresholds is consistent with previous date-based guidance as the Fed said in the statement. I suspect Federal Reserve Chairman Ben Bernanke will make that clear in the presser.
Finally, something I don't talk much about is the uncertainty about the pace of tightening:
While the central tendency is for a gradual increase in the fed funds rate, there are a few expecting a relatively shift policy shift. Consistent with uncertainty about the exit strategy.
Press conference next.
