“We don’t expect major fireworks at the June FOMC meeting. Chair Powell and the Fed has communicated that they are likely to hike by 50bp at this meeting (as well as at the next meeting in July) and we expect them to deliver. What will be of interest will be the updated Summary of Economic Projections (SEP) and dot plot.
…
In the press conference, we expect Chair Powell to reiterate that labor market momentum is still too strong, inflation remains a big problem, and that the Fed is committed to restoring price stability. We don’t expect any concrete forward guidance beyond the next meeting, with Powell noting a reassessment in the path of hikes in September dependent on convincing signs that inflation is slowing. If asked about a pause in September, he is likely to outright dismiss the idea.”
Wall Street forecasts are being revised down for 2022 due to the ongoing negative impacts from the pandemic and the war in Ukraine. So, GDP for 2022 will likely be revised down.
| GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1 | ||||
|---|---|---|---|---|
| Projection Date | 2022 | 2023 | 2024 | |
| Mar 2022 | 2.5 to 3.0 | 2.1 to 2.5 | 1.8 to 2.0 | |
The unemployment rate was at 3.6% in May. The question is: Will the slowdown in economic growth push up the unemployment rate? Or will the rate continue to decline? The projections for the unemployment rate will likely be mostly unchanged.
| Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2 | ||||
|---|---|---|---|---|
| Projection Date | 2022 | 2023 | 2024 | |
| Mar 2022 | 3.4 to 3.6 | 3.3 to 3.6 | 3.2 to 3.7 | |
As of April 2022, PCE inflation was up 6.3% from April 2021. This was below the cycle high of 6.6%. Based on recent readings, inflation might stay elevated longer than expected. PCE inflation will likely be revised up for 2022.
| Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1 | ||||
|---|---|---|---|---|
| Projection Date | 2022 | 2023 | 2024 | |
| Mar 2022 | 4.1 to 4.7 | 2.3 to 3.0 | 2.1 to 2.4 | |
PCE core inflation was up 4.9% in April year-over-year. This was below the cycle high of 5.3%. Core PCE inflation will also likely be revised up.
| Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1 | ||||
|---|---|---|---|---|
| Projection Date | 2022 | 2023 | 2024 | |
| Mar 2022 | 3.9 to 4.4 | 2.4 to 3.0 | 2.1 to 2.4 | |