Full text of Federal Open Market Committee Meeting Minutes, Transcripts, and Other Documents : Meeting, March 17-18, 2015 : SEP: Compilation and Summary of Individual Economic Projections

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SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Table 1. Economic projections of Federal Reserve Board members and Federal Reserve Bank presidents,
March 2015
Percent

2015
Change in real GDP . . . . . . . . . . 2.3 to 2.7
December projection . . . . . . 2.6 to 3.0

Central tendency1
2016
2017
2.3 to 2.7 2.0 to 2.4
2.5 to 3.0 2.3 to 2.5

Unemployment rate . . . . . . . . . . . 5.0 to 5.2
December projection . . . . . . 5.2 to 5.3

4.9 to 5.1
5.0 to 5.2

PCE infation . . . . . . . . . . . . . . . . . 0.6 to 0.8
December projection . . . . . . 1.0 to 1.6
Core PCE infation3 . . . . . . . . . . 1.3 to 1.4
December projection . . . . . . 1.5 to 1.8

Variable

Longer run
2.0 to 2.3
2.0 to 2.3

2015
2.1 to 3.1
2.1 to 3.2

Range2
2016
2017
2.2 to 3.0 1.8 to 2.5
2.1 to 3.0 2.0 to 2.7

4.8 to 5.1
4.9 to 5.3

5.0 to 5.2
5.2 to 5.5

4.8 to 5.3
5.0 to 5.5

4.5 to 5.2
4.9 to 5.4

4.8 to 5.5
4.7 to 5.7

4.9 to 5.8
5.0 to 5.8

1.7 to 1.9
1.7 to 2.0

1.9 to 2.0
1.8 to 2.0

2.0
2.0

0.6 to 1.5
1.0 to 2.2

1.6 to 2.4
1.6 to 2.1

1.7 to 2.2
1.8 to 2.2

2.0
2.0

1.5 to 1.9
1.7 to 2.0

1.8 to 2.0
1.8 to 2.0

1.2 to 1.6
1.5 to 2.2

1.5 to 2.4
1.6 to 2.1

1.7 to 2.2
1.8 to 2.2

Longer run
1.8 to 2.5
1.8 to 2.7

Note: Projections of change in real gross domestic product (GDP) and projections for both measures of infation are percent changes from
the fourth quarter of the previous year to the fourth quarter of the year indicated. PCE infation and core PCE infation are the percentage rates
of change in, respectively, the price index for personal consumption expenditures (PCE) and the price index for PCE excluding food and energy.
Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated. Each participant’s
projections are based on his or her assessment of appropriate monetary policy. Longer-run projections represent each participant’s assessment of the
rate to which each variable would be expected to converge under appropriate monetary policy and in the absence of further shocks to the economy.
The December projections were made in conjunction with the meeting of the Federal Open Market Committee on December 16–17, 2014.
1. The central tendency excludes the three highest and three lowest projections for each variable in each year.
2. The range for a variable in a given year includes all participants’ projections, from lowest to highest, for that variable in that year.
3. Longer-run projections for core PCE infation are not collected.

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Page 1 of 47

SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Table 1.A. Economic projections for the frst half of 2015*
(in percent)

Central tendencies and ranges
Central tendency

Range

2.1 to 2.4
-0.3 to 0.0
1.1 to 1.2

2.0 to 2.7
-0.3 to 0.4
1.0 to 1.3

Change in real GDP
PCE infation
Core PCE infation

Participants’ projections
Projection

Change in real GDP

PCE infation

Core PCE infation

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

2.2
2.0
2.0
2.6
2.7
2.3
2.7
2.2
2.1
2.4
2.4
2.2
2.4
2.4
2.4
2.4
2.1

−0.2
−0.3
−0.3
0.0
0.2
−0.3
−0.2
−0.3
−0.3
0.0
−0.3
−0.3
−0.3
−0.3
−0.3
−0.1
0.4

1.1
1.1
1.1
1.2
1.2
1.0
1.1
1.1
1.1
1.1
1.1
1.2
1.1
1.0
1.2
1.3
1.1

* Growth and infation are reported at annualized rates.

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Page 2 of 47

SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Table 1.B. Economic projections for the second half of 2015*
(in percent)

Central tendencies and ranges
Central tendency

Range

2.6 to 3.0
1.5 to 1.7
1.4 to 1.7

2.2 to 3.5
1.0 to 2.8
1.3 to 2.0

Change in real GDP
PCE infation
Core PCE infation

Participants’ projections
Projection

Change in real GDP

PCE infation

Core PCE infation

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

2.6
2.2
2.6
3.0
3.5
2.7
3.3
3.2
2.5
3.0
2.8
2.6
2.8
2.6
3.0
2.6
2.3

1.6
1.5
1.5
1.6
2.8
1.5
2.2
1.5
1.5
1.6
1.7
1.5
1.9
1.7
1.7
1.7
1.0

1.3
1.5
1.5
1.6
2.0
1.4
1.9
1.7
1.5
1.7
1.5
1.4
1.7
1.4
1.4
1.7
1.5

* Projections for the second half of 2015 implied by participants’ March projections for the frst half of 2015 and
for 2015 as a whole. Growth and infation are reported at annualized rates.

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Page 3 of 47

SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Table 2. March economic projections, 2015–17 and over the longer run (in
percent)
Projection

Year

Change in
real GDP

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015
2015

2.4
2.1
2.3
2.8
3.1
2.5
3.0
2.7
2.3
2.7
2.6
2.4
2.6
2.5
2.7
2.5
2.2

5.2
5.1
5.2
5.2
4.8
5.2
5.2
5.2
5.2
5.2
5.0
5.0
5.3
5.1
5.2
5.0
5.3

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016
2016

2.5
2.3
2.3
2.7
2.5
2.2
3.0
2.5
2.6
2.7
2.3
2.5
2.7
2.3
2.8
2.3
2.2

5.1
4.9
5.0
5.1
4.5
5.1
5.2
5.0
5.0
5.1
5.0
4.8
5.1
4.8
5.0
5.0
5.0

Authorized for Public Release

Unemployment
PCE
rate
infation

Page 4 of 47

Core PCE
infation

Federal
funds rate

0.7
0.6
0.6
0.8
1.5
0.6
1.0
0.6
0.6
0.8
0.7
0.6
0.8
0.7
0.7
0.8
0.7

1.2
1.3
1.3
1.4
1.6
1.2
1.5
1.4
1.3
1.4
1.3
1.3
1.4
1.2
1.3
1.5
1.3

0.38
0.63
0.63
0.88
1.38
0.63
1.38
0.13
0.63
0.63
0.88
0.63
0.88
0.63
0.13
1.63
1.13

1.7
1.7
1.6
1.8
2.4
1.7
2.0
1.7
1.7
1.8
1.9
1.7
1.9
1.6
1.7
2.0
1.9

1.5
1.6
1.5
1.7
2.4
1.6
1.9
1.8
1.6
1.8
1.8
1.7
1.9
1.5
1.5
2.0
1.9

1.88
1.63
1.63
2.13
3.38
1.63
3.38
0.38
1.88
1.63
2.25
1.63
1.88
1.63
1.13
3.75
2.63

SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Table 2. (continued)
Projection

Year

Change in
real GDP

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017
2017

2.2
2.0
2.2
2.4
1.8
2.3
2.5
2.2
2.2
2.5
2.0
2.4
2.3
2.0
2.5
2.2
2.0

5.0
4.9
4.9
5.0
5.3
5.0
5.5
4.9
4.8
5.0
5.2
4.8
5.1
4.8
4.8
5.0
5.0

1.8
1.9
1.9
2.0
2.2
1.9
2.0
2.0
1.9
2.0
2.1
1.9
2.0
2.0
1.7
2.2
2.0

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

LR
LR
LR
LR
LR
LR
LR
LR
LR
LR
LR
LR
LR
LR
LR
LR
LR

2.0
2.0
2.2
2.4
2.0
1.9
2.5
2.0
2.0
2.3
2.0
2.5
2.3
2.0
2.3
2.2
1.8

5.0
5.0
5.0
5.2
5.8
5.0
5.5
5.0
5.0
5.0
5.2
4.9
5.2
5.0
5.0
5.2
5.0

2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0

Authorized for Public Release

Unemployment
PCE
rate
infation

Page 5 of 47

Core PCE
infation

Federal
funds rate

1.8
1.8
1.9
1.9
2.2
1.8
2.0
2.0
1.9
2.0
2.0
2.0
2.0
2.0
1.7
2.1
2.0

3.38
3.13
2.63
3.63
3.88
2.63
3.75
2.00
3.13
3.63
3.75
2.88
2.88
3.13
2.63
4.00
3.13
3.50
3.50
3.75
3.75
4.00
3.50
3.75
3.00
3.50
4.00
3.75
3.50
4.25
3.50
3.50
3.75
3.75

SEP: Compilation and Summary of Individual Economic Projections

Table 2 Appendix. Timing (quarter) of lifto
quarter of lifto
Projection

Year of frst
increase

Quarter of
frst
increase

Change in
real GDP

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

2015
2015
2015
2015
2015
2015
2015
2016
2015
2015
2015
2015
2015
2015
2016
2015
2015

4
3
3
2
2
3
2
4
3
3
2
2
2
3
1
2
2

2.4
2.1
2.1
3.0
3.2
2.4
3.2
2.5
2.3
2.6
3.0
2.8
3.0
2.4
2.8
3.0
2.8

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Page 6 of 47

March 17–18, 2015

and economic conditions in

Unemployment PCE
rate
infation
5.2
5.2
5.3
5.3
5.3
5.2
5.4
5.0
5.2
5.3
5.3
5.3
5.5
5.2
5.2
5.3
5.4

0.7
0.1
0.1
0.2
0.3
0.1
0.1
1.7
0.1
0.3
0.4
0.0
0.0
0.1
1.1
0.2
0.0

Core PCE
infation
1.2
1.2
1.3
1.2
1.2
1.1
1.2
1.8
1.2
1.2
1.2
1.2
1.2
1.1
1.4
1.3
1.2

SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Figure 1.A. Central tendencies and ranges of economic projections, 2015–17 and over the longer run
Percent

Change in real GDP

4

Central tendency of projections
Range of projections

3
2
1
+
0
-

Actual

2010

2011

2012

2013

2014

2015

2016

2017

Longer
run
Percent

Unemployment rate

10
9
8
7
6
5

2010

2011

2012

2013

2014

2015

2016

2017

Longer
run
Percent

PCE inflation
3

2

1

2010

2011

2012

2013

2014

2015

2016

2017

Longer
run
Percent

Core PCE inflation
3

2

1

2010

2011

2012

2013

2014

2015

2016

2017

Longer
run

Note: Definitions of variables are in the general note to table 1. The data for the actual values of the variables are
annual.

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Page 7 of 47

SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Figure 1.B. Central tendencies and ranges of economic projections, 2015–17 and over the longer run

Percent

Change in real GDP
Central tendency of projections
Range of projections

4

3

2

1

Actual

+
0
-

2010

2011

2012

2013

2014

2015

2016

2017

Longer
run
Percent

Unemployment rate

10
9
8
7
6
5

2010

2011

2012

2013

2014

2015

2016

2017

Longer
run
Percent

PCE inflation

3

2

1

2010

2011

2012

2013

2014

2015

2016

2017

Longer
run

Note: Definitions of variables are in the general note to table 1. The data for the actual values of the variables are
annual.

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Page 8 of 47

SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Figure 2. Overview of FOMC participants’ assessments of appropriate monetary policy

Number of participants

Appropriate timing of policy firming
15

15
14
13
12
11
10
9
8
7
6
5
4
3

2

2
1

2015

2016
Percent

Appropriate pace of policy firming: Midpoint of target range or target level for the federal funds rate
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0

2015

2016

2017

Longer run

Note: In the upper panel, the height of each bar denotes the number of FOMC participants who judge that, under
appropriate monetary policy, the first increase in the target range for the federal funds rate from its current range of
0 to 1/4 percent will occur in the specified calendar year. In December 2014, the numbers of FOMC participants who
judged that the first increase in the target federal funds rate would occur in 2015, and 2016 were, respectively, 15, and 2.
In the lower panel, each shaded circle indicates the value (rounded to the nearest 1/8 percentage point) of an individual
participant’s judgment of the midpoint of the appropriate target range for the federal funds rate or the appropriate
target level for the federal funds rate at the end of the specified calendar year or over the longer run.

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Page 9 of 47

SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Figure 4.A. Uncertainty and risks – GDP growth

2(a): Please indicate your judgment of the uncertainty attached to your projections
relative to levels of uncertainty over the past 20 years.
Number of participants

March projections
December projections

18
16
14
12
10
8
6
4
2

Lower
(C)

Broadly similar
(B)

Higher
(A)

2(b): Please indicate your judgment of the risk weighting around your projections.
Number of participants

March projections
December projections

18
16
14
12
10
8
6
4
2

Weighted to downside
(C)

Broadly balanced
(B)

Weighted to upside
(A)

Individual responses
Respondent

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

2(a)
2(b)

B
C

B
B

B
B

B
B

B
B

B
B

B
B

B
C

B
C

B
C

B
B

A
B

B
B

A
B

B
B

B
B

B
B

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SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Figure 4.B. Uncertainty and risks – Unemployment rate

2(a): Please indicate your judgment of the uncertainty attached to your projections
relative to levels of uncertainty over the past 20 years.
Number of participants

March projections
December projections

18
16
14
12
10
8
6
4
2

Lower
(C)

Broadly similar
(B)

Higher
(A)

2(b): Please indicate your judgment of the risk weighting around your projections.
Number of participants

March projections
December projections

18
16
14
12
10
8
6
4
2

Weighted to downside
(C)

Broadly balanced
(B)

Weighted to upside
(A)

Individual responses
Respondent

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

2(a)
2(b)

B
B

B
B

B
B

B
B

B
B

B
C

B
B

B
A

B
B

B
B

B
B

A
B

B
B

A
B

B
B

B
B

B
B

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Page 11 of 47

SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Figure 4.C. Uncertainty and risks – PCE inflation

2(a): Please indicate your judgment of the uncertainty attached to your projections
relative to levels of uncertainty over the past 20 years.
Number of participants

March projections
December projections

18
16
14
12
10
8
6
4
2

Lower
(C)

Broadly similar
(B)

Higher
(A)

2(b): Please indicate your judgment of the risk weighting around your projections.
Number of participants

March projections
December projections

18
16
14
12
10
8
6
4
2

Weighted to downside
(C)

Broadly balanced
(B)

Weighted to upside
(A)

Individual responses
Respondent

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

2(a)
2(b)

B
B

B
C

A
C

A
A

B
B

B
C

B
B

A
C

B
C

A
C

B
B

B
B

B
C

B
B

B
C

B
B

B
B

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Page 12 of 47

SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Figure 4.D. Uncertainty and risks – Core PCE inflation

2(a): Please indicate your judgment of the uncertainty attached to your projections
relative to levels of uncertainty over the past 20 years.
Number of participants

March projections
December projections

18
16
14
12
10
8
6
4
2

Lower
(C)

Broadly similar
(B)

Higher
(A)

2(b): Please indicate your judgment of the risk weighting around your projections.
Number of participants

March projections
December projections

18
16
14
12
10
8
6
4
2

Weighted to downside
(C)

Broadly balanced
(B)

Weighted to upside
(A)

Individual responses
Respondent

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

2(a)
2(b)

B
B

B
C

B
C

A
A

B
B

B
C

B
B

A
C

B
C

A
C

B
B

B
B

B
C

B
B

B
C

B
B

B
B

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Page 13 of 47

SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Longer-run Projections
1(c). If you anticipate that the convergence process will take SHORTER
OR LONGER than about fve or six years, please indicate below your best
estimate of the duration of the convergence process. You may also include
below any other explanatory comments that you think would be helpful.
Respondent 1: N/A
Respondent 2: N/A
Respondent 3: N/A
Respondent 4: I anticipate that the economy will converge to its longer run growth and infation
targets by the end of 2017.
Respondent 5: All measures converge in 2018, somewhat shorter than 5-6 years. Prior to reaching
their long-run values, I expect real GDP growth to fall below its long-run value of 2% and the unemployment rate to decline further below its long-run value of 5.8%. I also expect the infation measures
to overshoot 2%.
Respondent 6: Convergence to the mandated goals is expected to occur over the 2017-18 period.
Respondent 7: At this point, convergence is likely in two to three years.
Respondent 8: It will be shorter under appropriate monetary policy, in part because the FOMC
will take appropriate steps to help return the underlying rate of infation to 2%. My assessment of
appropriate monetary policy puts little weight on interest rate smoothing.
Respondent 9: N/A
Respondent 10: No comment.
Respondent 11: N/A
Respondent 12: Very hard to know, given that we will converge –if at all– to a stochastic steady
state.
Respondent 13: I anticipate that convergence of real GDP growth and infation will take less than
5 years. Specifcally, I expect real GDP growth to slow to its longer-run rate by 2017 and infation to
rise to close to 2 percent in 2016. I expect the unemployment rate will hit its longer-run level in 2016,
fall below it by the end of 2016 and in 2017, before moving back to its longer-run level.

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Page 14 of 47

SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Respondent 14: We continue to assume that the economy’s potential growth rate is within a range
around 2% and maintain a point estimate of 2%. We currently assess that a reasonable range for
the longer-run unemployment rate is 4% to 6%, and we have maintained our point estimate of 5%.
We expect the unemployment rate to reach its longer-run level in 2016Q1, and for it to fall slightly
below that level later in 2016, which would be consistent with the implications of some of our scenario
analysis of labor fows as well as our analysis of unemployment behavior in recent long expansions.
We assume that long-term infation expectations will continue to be anchored at levels consistent
with the FOMC longer-run objective (2% for the PCE defator and around 2.5% for the CPI, based on
the longer-term average of the di erence between CPI and PCE infation). Under these conditions and
with the resource gap anticipated to dissipate over the forecast horizon (the unemployment gap may
not provide an accurate measure of the resource gap at this time), we expect infation as measured by
the PCE defator to be about 2% in 2017 and thereafter.
As indicated in our projections, we anticipate that under appropriate monetary policy and no
further shocks, the convergence process should be largely completed in 2017.
Respondent 15: We revised down our estimates of the natural rate of unemployment in light of
new analysis highlighting changes in the composition of the labor force towards groups with lower
average unemployment rates. We also reduced our long-run equilibrium funds rate estimate to better
refect increased global savings tendencies.
Respondent 16: I expect the unemployment rate to reach its longer-run sustainable level during
the frst half of 2015, and then to fall past that level. Smooth convergence to the natural rate from
below will require deft maneuvering and a good deal of luck, and is unlikely to be achieved until 2018.
I expect core infation to reach 2 percent in 2016, to overshoot somewhat in 2017, and not converge
back to target until 2019.
Respondent 17: I formerly submitted 5.5 percent as my projection for the longer-run unemployment rate, thinking of that concept as corresponding to a longer-run average unemployment rate.
On further refection, I think it makes more sense to think that in the absence of shocks and under
appropriate monetary policy, the unemployment rate would converge to a rate corresponding to rates
typically seen in the late stages of business cycle expansions. This refects a sense that shocks that
tend to necessitate sectoral reallocation and thus temporarily raise the unemployment rate are more
frequent than shocks that reduce the unemployment rate.

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Uncertainty and Risks
2(a). (Optional) If you have any explanatory comments regarding your
judgment of the uncertainty attached to your projections relative to levels
of uncertainty over the past 20 years, you may enter them below.
Respondent 1: N/A
Respondent 2: N/A
Respondent 3: The recent volatility in oil prices and the uncertainty about the reponse of oil
demand and oil supply to the recent drop in oil prices going forward imply a higher-than-usual amount
of uncertainty around energy prices and PCE infation.
Respondent 4: It remains the case that the extraordinary monetary policy in place and uncertainties surrounding the future path of policy, including the timing of the exit from accommodative policy,
contribute to uncertainty around my infation forecast.
Respondent 5: N/A
Respondent 6: N/A
Respondent 7: N/A
Respondent 8: N/A
Respondent 9: N/A
Respondent 10: Oil price futures appear to be particularly volatile at the moment, increasing the
uncertainty around my headline PCE projections. I also judge the uncertainty surrounding my core
PCE infation projection as “higher.” This is largely due to recent movements in measures of infation
compensation and uncertainty regarding how infation expectations are reacting to a prolonged period
of below-target core infation readings.
Respondent 11: Uncertainty about my projection for economic activity is similar to its average
level over the past 20 years, which, of course, is a period that was characterized by considerable
turmoil. Infation remains anchored by quite stable longer-run infation expectations at the FOMC’s
stated goal of 2 percent. Infation expectations have now been well anchored for about 20 years, so
I see the magnitude of the uncertainty around the infation outlook as consistent with that over the
past 20 years.
Respondent 12: N/A
Respondent 13: N/A

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Respondent 14: Quantitative judgment based on the width of the probability intervals from the
FRBNY forecast distribution for real GDP growth and core PCE infation relative to the forecast
errors over the last 20 years. The width of these intervals have narrowed some since the December
SEP, as the recent developments generally have been consistent with the central forecast. Nevertheless,
the probability intervals for the real activity forecasts are still wider than the SEP standard, in part
because of the still-extraordinary economic and fnancial environment, including the policy rate in
the U.S. remaining constrained by its e ective lower bound and the negative rates seen in a number
of areas in Europe. The possible net impact on real activity of the recent decline in oil prices and
of continuing dollar appreciation is not yet clear, contributing to the uncertainty. In contrast, the
forecast intervals for core PCE infation appear broadly consistent with the SEP standard, taking
rough account for the di erences between forecast errors for overall consumer infation and core PCE
infation.
Respondent 15: N/A
Respondent 16: N/A
Respondent 17: N/A

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Uncertainty and Risks (continued)
2(b). (Optional) If you have any explanatory comments regarding your
judgment of the risk weighting around your projections, you may enter
them below.
Respondent 1: N/A
Respondent 2: N/A
Respondent 3: Recent oil and commodity price declines, a higher dollar, limited wage pressures,
and weak foreign aggregate demand have reduced infation to low levels recently. Over the medium
term, I expect the e ects of dollar appreciation to wane, and wage pressures to increase as resource
utilization rise. But there are risks that these factors continue to weigh on prices longer than I expect,
and that the dollar strengthens further. In this low infation environment, infation expectations may
start to decline.
Respondent 4: I view the risks to infation as weighted to the upside over the medium term and
longer run. Longer-term infation risks refect uncertainty about the timing and eÿcacy of the Fed’s
withdrawal of accommodation. The risks to output growth and unemployment are balanced.
Respondent 5: N/A
Respondent 6: N/A
Respondent 7: The risks to my projections are broadly balanced. Weakness abroad is a downside
risk to my forecast. Further weakening in the economies of key trading partners may have a larger
e ect on U.S. export growth than I am forecasting. But central banks in foreign economies have been
adding accommodation, which should help stimulate global demand.
Oil prices are low, which should be a net positive for spending. The U.S. labor market is showing
solid gains, which will support household spending. The combination of these factors alongside highly
accommodative monetary policy raises the possibility that the U.S. economy may be poised for faster
growth than I am currently projecting.
Infation risks are balanced. The weakness in frst-quarter infation readings refects the oil-price
shock and some limited pass-through to core infation, which I expect to be transitory. Oil prices have
begun to stabilize.
Survey-based measures of infation expectations have been relatively stable. I take less signal
for infation expectations from the measures of infation compensation based on asset prices because
changes in the latter may be refecting liquidity e ects rather than changes in infation expectations.
If a broader-based downward drift in infation expectations were to materialize, it would be a downward risk to my infation projection. On the other hand, too slow a withdrawal of monetary policy
accommodation has the potential to create upside risks to infation over the medium run.
Respondent 8: Because of the zero lower bound, and the perceived costs associated with asset
purchases, It is hard for the FOMC to respond e ectively to low infation and low growth outcomes.
This means that these outcomes are more likely to occur.

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Respondent 9: Although I see the distribution of shocks to aggregate demand as reasonably balanced, I still view the balance of risks to GDP growth as somewhat weighted to the downside due to
the constraints that limit the ability of monetary policy to o set negative shocks to demand at the zero
lower bound. I see the risks to unemployment as balanced, with the risk of higher unemployment due
to the constraints imposed by the zero lower bound o set by the risk that productivity may continue
to grow more slowly than anticipated, as it has done over the past few years. For some time now both
wage and price infation have been running below the levels I had anticipated, and reductions in energy prices and increases in the dollar are likely to put further downward pressure on consumer prices
in coming months. In addition, market-based measures of expected infation remain at an unusually
low level, although I attribute much of the decline since last summer to special factors. While I view
these developments as largely transitory, they do suggest that low infation could prove to be more
persistent than I expect, creating risks to infation I consider to be weighted to the downside.
Respondent 10: No comments.
Respondent 11: Risks to economic activity appear balanced. Recent data point to slower GDP
growth this quarter and last, but some of that softness likely is due to temporary factors such as
adverse weather. Overall, most indicators suggest steady improvements in economic conditions going
forward. Most of the remaining headwinds continue to abate. Indeed, with diminishing headwinds,
upside scenarios involving a virtuous cycle of economic activity become more plausible.
The zero lower bound does somewhat constrain our ability to respond to adverse shocks. However,
this constraint no longer appears quantitatively important, especially in light of the apparent e ectiveness of forward guidance and LSAPs. Moreover, normalization of monetary policy means that the
zero lower bound will be less relevant over the forecast horizon.
Infation risks are also balanced. The recent low readings on headline and core PCE infation raise
the possibility that infation could remain below target for some time. On the other side, the steady
diminution of labor market slack increases the odds of building wage pressures feeding through to
more infation in the near-term.
Respondent 12: N/A
Respondent 13: The risks to the outlook for PCE infation and core PCE infation are weighted
to the downside as a result of the recent shifts in energy prices and foreign exchange rates.
Respondent 14: Quantitative judgment based on the di erence between the central projection and
the expected value from the FRBNY forecast distribution. Under our appropriate policy stance, the
risks to the infation outlook are roughly balanced, as has been the case in recent SEPs: even though
the decline in market-based infation compensation and declines in a number of commodity prices
indicate notable downside risks, these risks are o set by the possibility of a faster-than-anticipated
depletion of resource slack as well as the possibility of greater supply-side constraints. The risks to the
real activity outlook also are roughly balanced over our forecast horizon. The broad balance refects
two opposing forces evident in the contrasting tone of recent data–relatively strong labor market
data and relatively weak expenditure data. One force is the possibility that the sluggish growth
through much of this expansion has come from more persistent structural factors rather than from
various headwinds that are expected to abate in our central forecast–a possibility consistent with the
weaker expenditure data. The other force is the possibility that the economy has greater underlying
strength than anticipated in our projection–a possibility consistent with the stronger labor market
data. Beyond those forces, other risks include the impacts of the recent oil price decline and continuing
dollar appreciation on U.S. activity and infation; the low infation data and continued weakness in
many parts of the world, which could leave the U.S. and world economies more susceptible to negative

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shocks; and the constraints that monetary policy faces under the e ective lower bound in a number
of major economies.
Respondent 15: We think the risks to the growth and unemployment forecasts are roughly in balance. On the downside, the international growth outlook could deteriorate or the dollar appreciation
could have greater impact on net exports. Moreover, restrictive credit conditions could place greater
than expected constraints on the recovery in residential investment. On the up side, improved household sector fundamentals (notably, gains in wealth, the better job market, and lower energy prices)
and business sentiment suggest that we could see a more pronounced “virtuous circle” dynamic.
The factors that could place greater downward pressure on our infation forecast continue to outnumber those that might push it up more than expected. First, international developments including
the rise in the value of the dollar could put greater downward pressure on import prices than we
expect. Moreover, our forecast of infation picking up to just under 2 percent by the end of the projection period depends heavily on an upward pull from infation expectations supported by the FOMC’s
credible commitment to a symmetric 2 percent infation target. For some time we have noted the risk
that this upward force may not be as strong as we have assumed, a risk highlighted by the downward
drift in TIPS breakevens. Finally, even with a downward adjustment this time, it is possible that the
natural rate of unemployment is lower than we’ve assumed, implying an extra margin of slack.
Respondent 16: N/A
Respondent 17: N/A

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Key Factors Informing Your Judgments regarding the
Appropriate Path of the Federal Funds Rate
3(c). Please describe the key factors informing your judgments regarding
the appropriate path of the federal funds rate. If, in your projections for
any year in the projection period, the unemployment rate for that year is
close to or below your projection for its longer-run normal level and
infation for that year is close to or above 2 percent, and your assessment
of the appropriate level of the federal funds rate for that year is still
signifcantly below your assessment of its longer-run normal value, please
describe the factor or factors that you anticipate will make the
lower-than-normal funds rate appropriate. If you have reduced your
estimate of the longer-run normal value of the federal funds rate since the
previous SEP, please indicate the factor or factors accounting for the
change. You may include any other comments on appropriate monetary
policy as well.
Respondent 1: Compared to my December projection, I moved back one quarter my anticipated
lifto date. My background reasoning remains the same – that infation will not be at, or moving any
more than gradually toward, 2 percent, but that fnancial stability considerations – in the context of
steady growth and improvement in the labor market – will warrant a rate increase. The move back
from September to December is motivated by a combination of the more tepid nature of recent data,
a stronger dollar, and concern with the disinfationary forces at work throughout much of the world.
These factors together carry some risk of further downward pressure on infation, which remains well
below the FOMC’s stated target, or of a negative impact on growth.
Respondent 2: In my forecast, the unemployment rate will be at or below my 5.0% estimate of
the natural rate by about the end of 2015 and through 2017. In my view, that is appropriate because
infation remains well below target and because of uncertainty about the natural rate.
I reduced my estimate of the equilibrium real rate from 1.75% to 1.5%, and therefore reduced my
estimate of the long run nominal federal funds rate from 3.75% to 3.5%. There are many reasons,
including the longer term trend to ever lower rates, higher global saving, greater risk aversion, slower
growth and lower investment.
Respondent 3: Although we have seen continued improvement in aggregate unemployment, and the
fall in oil prices has helped to boost the U.S. consumer, the aftere ects of the crisis continue to restrain
housing, and domestic investment remains subdued. Going forward, the signifcant appreciation of
the currency is likely to act as a considerable restraint both on real activity through net exports and
on core infation through core import prices. These e ects are likely to fade only slowly. As a result,
monetary policy may need to remain accommodative for longer to move employment and infation in
particular back to target levels.
Respondent 4: My appropriate path for policy has the Committee starting to raise the funds rate
in 2015Q2 as the economy continues to strengthen and infation moves toward target. My path for
the funds rate is within the range of prescriptions given by the monetary policy rules enumerated in
the Tealbook and has the funds rate gradually rising over the forecast horizon to reach its long-run
level of 3.75 percent in early 2018.

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Respondent 5: I reduced my long-run federal funds rate to 4.0% from 4.25%. This change refects
a reduction in my estimate of long-run real GDP growth to 2.0% from 2.3%.
Respondent 6: The longer-run neutral value of the federal funds rate has been reduced from 3.75
percent to 3.5 percent, to refect in part a downward revision to the longer-run estimate of the growth
of potential GDP. At the time of lifto , the unemployment rate is two-tenths of one percentage point
above its longer-run normal level, and infation is running well below target. After lifto , the removal
of policy accommodation is gradual. The gradual removal of accommodation allows monetary policy
to probe for the possibility of lower equilibrium levels of the unemployment rate and/or the equilibrium
real rate of interest.
Respondent 7: I continue to see underlying strength in the economy and labor markets. While
some of the data that inform near-term GDP have started the year on a soft note, I believe this
softness will prove to be due to temporary factors such as the severe weather and port disruptions.
The labor market has made considerable, sustained progress toward our goal of full employment, and
I expect further gains to be made. The actual unemployment rate in February was already at or near
many estimates of its longer-run level and underemployment has been steadily declining. The recent
decline in oil prices will hold headline infation down in the near term. But as oil prices stabilize and
the economy continues to expand, I anticipate that infation will move higher. I continue to project
a gradual rise in infation over the forecast horizon to the Committee’s 2 percent longer-run goal by
late 2016 or early 2017.
Given that monetary policy a ects the economy with a lag, I believe appropriate monetary policy
should refect both actual and projected progress toward the Committee’s goals. I project that the
economy will be at full employment this year and that in 2015Q2 projected infation between one and
two years ahead will reach the Committee’s goal of 2 percent. Thus, I believe it will be appropriate for
the FOMC to begin raising the fed funds rate in 2015Q2. Note that a change in statement language
at the March meeting would make this lifto date consistent with our forward guidance.
After lifto , I project the fed funds rate will rise gradually over the rest of 2015, similar to a path
suggested by a Taylor 1999 rule with inertia. As the expansion strengthens, I believe it will likely be
appropriate to raise interest rates at a slightly more rapid pace, described by a somewhat less inertial
Taylor 1999 rule.
As a result of delaying lifto until mid-2015 and the inertia in my monetary policy rule, I project
that the federal funds rate target will be slightly below its longer-run normal level at the end of 2016,
despite the fact that unemployment and infation are both near their longer-run levels.
Consistent with recent Committee discussions, I believe it will be appropriate to initially target
a 25 basis point range for the federal funds rate, with IOER at the top of the range and other tools
– including ON RRPs – preventing the funds rate from trading below the bottom end of the range.
Depending on our experiences with these tools and our ability to control the federal funds rate, this
target range may persist for some time.
Respondent 8: The data suggest that there has been a sharp fall in the natural real rate of interest
since 2007. We remain below maximum employment and below target infation, even though the
market real rate of interest (over any horizon) is much lower than in 2007. This means that the
neutral real rate of interest – consistent with target infation and maximum employment – has fallen
by even more.
There are many reasons for this change in the neutral real rate of nterest – but the main point is
that the change is likely to unwind over time – but only slowly and only partially. This judgment is
borne out by the real yield curve, which is upward sloping (roughly 20 basis points over the next fve
years, and rising to somewhat over 1% from 2025 to 2035). Note that this real yield curve is roughly

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consistent with infation break-evens of around 2%, which suggests that these market interest rates
are refective too of what’s happening with the neutral real rate of interest.
Put another way: I see the intercept term in the Taylor Rule as being a stochastic process with a
lot of persistence. That intercept term is very low, and is likely to return to its long-run value only
slowly.
I have also taken on board the sta ’s downward revision of the underlying rate of infation, as well
as the sta ’s view that overshooting of the unemployment rate below its natural rate will be helpful
to bring infation back to 2 percent. Given the low infation outlook, I believe it would be appropriate
to reinstate some kind of asset purchase program.
I have reduced my estimate of the longer-run normal value of the federal funds rate since the
previous SEP because longer-term nominal market interest rates have fallen even further in the last
six months.
Respondent 9: My path for the federal funds rate, both before and after lifto from the zero bound,
is shaped by my expectation that the headwinds that have been holding back the recovery since the
fnancial crisis will continue to exert a restraining, albeit abating, infuence on aggregate demand for
several years to come. In addition, infation has been running well below our 2% longer-run objective,
and I expect it to move only gradually back to 2%. To promote the attainment of our maximum
employment and price stability objectives over the medium term I see it as necessary to pursue an
accommodative policy throughout the forecast period. In part, my assessment that the appropriate
pace of policy normalization should be gradual is based on my assessment that we initially will need
to proceed cautiously until we are confdent that infation is really moving back to target. In addition,
I would assess the equilibrium real funds rate at present to be substantially below my estimate of its
longer run normal level of around 1.5%, and to move only some way back toward this level over the
forecast period. I do not expect it to fully return to its longer-run normal level even by the end of
2017. This refects factors such as (i) ongoing balance sheet repair by households and limited access
to mortgage credit, which prevent households from taking advantage of very low interest rates to the
same extent they would if their balance sheets had not been impaired; and (ii) weak real activity
abroad (both actual and feared) that has put upward pressure on the dollar and is likely to continue
to restrict U.S. next exports for some time. My estimates of the longer-run normal level of the nominal
and real federal funds rate are unchanged at 3.5% and 1.5%, respectively, and are the same as the
sta ’s newly revised estimates. In 201 7, my forecast for the unemployment rate falls two-tenths below
my estimate of its long-run natural rate, with infation at 1.9 percent just below our target. I view
this modest undershoot as helpful in return infation more quickly to our 2 percent objective, and
therefore appropriate.
Respondent 10: My outlook has lifto for the federal funds rate in September 2015 (to a range
of 25-50 basis points), followed by 25 basis point increases at every other meeting through 2016.
The trajectory steepens to 25 basis point increases at every meeting in 2017, nearing its appropriate
long-run value by the end of the year.
Respondent 11: Output and unemployment gaps continue to decline. I expect these gaps to close
by the end of this year or early next year. In addition, my outlook for infation through the end of 2016
is below our 2 percent objective. This situation continues to call for very accommodative monetary
policy. Appropriate policy in this case is to delay lifto from the zero lower bound until the middle
of 2015. My judgment on appropriate policy is generally informed by looking at simple rules that
adjust for the zero lower bound, as well as by my expectations of, and uncertainty about, the costs
and benefts of continuing unconventional actions.
Following lifto , my fed funds path through the end of 2016 remains fatter than some simple rules
would suggest. In my projection, the reasons include the following:

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• Although the unemployment rate by the middle of 2015 is essentially at its long-run natural rate,
broader measures of slack (including the share of long-term unemployment) take a bit longer to
return to normal, refecting the dynamics of the labor market.
• Some headwinds remain in 2016, such as constraints on credit availability for small businesses
and foreign economic activity. These continue to reduce the equilibrium real interest rate relative
to its long-run value.
• In an environment in which short-term rates have been near zero for almost seven years, there
are potentially some modest benefts to having an earlier lifto but then a more gradual rate
path than might normally be called for. These benefts include managing expectations and
minimizing the potential for disruptions to global fnancial markets.
Respondent 12: (i) Recent growth data and forecasts have caused me to reduce my estimate of
future growth.
(ii) I’ve become more convinced to go early and gradual.
Respondent 13: My judgment regarding the appropriate path of the federal funds rate is predicated
on promoting sustainable long-run economic growth and price stability. My forecast calls for the
unemployment rate to be near its longer-run level and infation close to 2 percent in early 2016. Given
uncertainty about how the economy will respond to the removal of accommodation after a prolonged
period of near-zero rates, I view increases in the funds rate should be gradual to see how the economy
responds. Adjustments should be data dependent, but the gradual approach to normalizing policy
results in a funds rate below my estimate of its longer-run level in 2016 and 2017.
Respondent 14: The crucial factors behind our assessment of the appropriate path for monetary
policy and the FFR are the current state of the economy, our central economic outlook, and our
balance of risks around the central outlook. As such, we believe it is important to communciate
clearly to the public that these factors will dictate the path of the policy stance. The changes along
these dimensions were suÿcient to lead to some changes in our assessment of the appropriate path for
the FFR.
Based on our modal outlook and assuming that long-term infation expectations remain anchored,
we anticipate that the target range for the FFR will remain at its current level until September
2015, one quarter later than in the December SEP. This change was a close call as lifting o in June
or September would have only a small impact on the appropriate path for policy under our modal
outlook. Given that infation likely will be well below the FOMC’s objective at both dates, we believe
that the later date for lifto would provide a greater beneft in securing greater confdence at the time
of lifto that infation over the medium term will be moving toward 2% and reducing the risk of a
return to the zero lower bound. Nevertheless, it is important to communicate to the public that the
decision about the timing of lifto will be dependent upon the data and the FOMC’s assessment of
the outlook and risks rather than a particular calendar date.
However, a more important factor in determining the stance of policy as we approach normalization
will be the pace of rate increases following lifto . In general, this pace will depend upon our assessment of economic conditions and the outlook, longer-term infation expectations, and the response of
overall fnancial conditions to policy tightening. Currently, the low levels of infation and longer-term
infation compensation, the uncertainty surrounding the outlook of infation moving toward 2%, and
the uncertainty about the level of the equilibrium real FFR [discussed further below] all point to a
more gradual pace during the early stages of normalization than we anticipated in the December SEP.
Therefore, we have moved down our assessment of the appropriate path such that the target FFR
ranges at the end of 2015 and the end of 2016 will be 1/2 - 3/4% and 1 3/4 - 2% respectively. We thus do
not expect that the FFR will reach our estimate of its longer-run normal rate until 2018. We believe
that this gradual path is necessary to provide insurance against the various restraining forces still faced

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by the U.S. economy (including those stemming from global economic and fnancial developments)
and to address the uncertainty about the equilibrium real FFR, which in turn will help ensure the
achievement of the FOMC’s objectives over the longer run. Moreover, in current circumstances–very
low infation and unemployment near our estimate of its longer-run normal level–unemployment is
most likely to fall below its longer-run normal level under appropriate policy, thus providing more
insurance against the risk of being caught in a low infation trap. In fact, our modal forecast has the
unemployment rate falling below our 5% estimate of the longer-run normal rate.
Another factor informing our assessment of the appropriate path for the target FFR is our estimate
of the equilibrium real short-term interest rate. We have previously assumed that in normal times
this rate is in the range of 1% - 3%; however, the protracted period of low global interest rates and
uncertainty about the equilibrium real rate have led us to widen the range to 1/2 - 3%. Adding the
objective for infation (2%) then gives our estimated range for nominal equilibrium rate as 2.5 - 5.0%.
We continue to assess that the equilibrium rate is more likely to be in the lower half of that range
because of the behavior of nominal and real Treasury yields and productivity growth since the end of
the recession; therefore, we have maintained our point estimate of 3 1/2%, as seen in the response to
question 3(a).
We would also note that we assume that reinvestment continues until economic and fnancial
conditions indicate that the exit from the zero lower bound appears to be sustainable and the risks of
a reversion are deemed to be negligible. Based on our modal outlook, we expect those conditions to
occur sometime in the frst half of 2016.
Respondent 15: We continue to believe it is appropriate that the Committee strongly demonstrate
its commitment to a symmetric 2 percent infation target with highly accommodative policy. Our
preferred way of doing this is for the FOMC to be clear that it will delay lifto until labor market
recovery is closer to completion (as measured by a broad array of indicators) and we can be confdent
that the medium-term outlook for infation is at least at 2 percent. We assume that the frst rate
increase will occur in March of 2016; at that time, our outlook has infation one to two years ahead
running just a little below 2 percent. We expect by then that the downward e ects of energy prices
will have dissipated and core infation will have clearly moved higher. After lifto , we believe it will
be appropriate for the path of rate increases to be quite shallow, at least initially. This would give the
Committee time to assess the economy’s performance under less accommodative fnancial conditions
and to observe whether infation is continuing to move up to target. We feel that a 2016 lift o date
and a shallow path for rate increases is appropriate policy from a risk management perspective, as
we view the costs of a retreat back to the zero lower bound as much greater than those of infation
running modestly above 2 percent for a couple of years if demand is unexpectedly strong. This policy
path results in the federal funds rate at the end of 2017 still being nearly a percentage point below our
assumption for the long-run neutral rate even though our forecasts for unemployment and infation
are near their long-run policy goals.
Respondent 16: History teaches that the best way to prolong an economic expansion is to ease
o the accelerator while the unemployment rate is still above its sustainable level. This approach
was successful in the 1960s, the 1980s and, again, in the 1990s. Unfortunately, it’s too late to apply
the same approach in the current expansion. The earliest feasible lifto date is now June, by which
time the economy will already have reached my estimate of full employment. With slack eliminated,
infation will rebound quickly as soon as oil prices and the dollar stabilize, and I expect to see 2
percent infation in 2016. To limit the overshoot in unemployment and infation, it will be necessary
to remove accommodation more quickly than I would have preferred. I assume that the Committee
moves to a neutral policy stance by the end of next year, and a bit beyond a neutral stance in 2017.
It is not the case in my projection that the funds rate is below my assessment of its longer-run normal
level at the point where infation reaches 2 percent and the unemployment rate is “close to or below”

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my projection for its longer-run normal level.
Respondent 17: I still believe that data in April will warrant raising interest rates. Trend growth
in consumer spending has increased, labor market conditions have improved signifcantly, and a variety
of policy rate benchmarks indicate higher real interest rates. I would favor waiting until June to raise
rates, however, in order to avoid undermining the credibility of our January statement and our Chair’s
characterization of the meaning of the word “patient.”

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Forecast Narratives
4(a). Please describe the key factors shaping your central economic
outlook and the uncertainty and risks around that outlook.
Respondent 1: My expectation is for a continued path of moderate recover as labor markets continue to improve and fscal headwinds disappear. Recent weakness in PCE and industrial production
numbers suggest, as refected in the change in Tealbook projections, some modest weakening of nearterm prospects. Diÿcult as it is to pin down the amont of slack in labor markets – what with the
somewhat conficting trends of strong job growth and weak wage growth – it seems to me on balance
that some slack remains and, in any case, that wages are unlikely to move up more than moderately
in the next several quarters. Global developments are again worrisome.
Respondent 2: N/A
Respondent 3: The gradual fading of the aftere ects of the global fnancial crisis in the U.S., developments abroad, levels of resource utilization, and infation expectations are the key factors shaping
my central economic outlook. In addition to the aftere ects of the fnancial crisis on domestic activity,
the depressing e ect of the elevated dollar on next exports and core infation will exert restraint on the
progression of employment and infation to target levels. In this environment, accommodative monetary policy remains necessary to move to maximum employment consistent with price stability and 2
percent infation, assuming infation expectations remain well anchored. The main risks to this central
economic outlook stem from developments abroad, in particular the tightening of fnancial conditions
and restraint on aggregate demand associated with a considerable and persistent strengthening of the
dollar.
Respondent 4: I expect the pace of output growth over the medium term to be somewhat above my
longer term trend of 2.4 percent as the headwinds that have been holding down growth recede further.
With fairly modest headline growth over the next three years, I anticipate that the unemployment
rate will fall to 5 percent in 2017, which is slightly below my longer term trend. With appropriate
monetary policy frming, I do not anticipate that the unemployment rate will move much below the
natural rate in 2017. I anticipate that headline infation will be held down some in early 2015 by the
recent fall in oil prices. By 2017, headline and core infation are near target. Infation stays anchored
around my target of 2 percent in response to tighter monetary policy than that anticipated in the
Tealbook.
Respondent 5: My view is that our lift-o , when it occurs, will be tardy. This tardiness is shaping
my forecasts of the overshooting of infation and the undershooting of unemployment.
Respondent 6: Incoming data on real economic activity has been below expectations. The rapid
dollar appreciation has led to a larger drag from net exports to GDP growth than previously thought.
Adverse weather may also have been playing a transitory role. Labor market improvements, however,
have continued at a solid pace. The disconnect between the spending and the labor market data
is being partly reconciled in the current outlook by assuming a somewhat slower pace of potential
GDP growth. This revision is accompanied by a downward revision to the short-run equilibrium real
rate of interest, which is now estimated at 1.5 percent. On the price side, core PCE infation has
continued to be running below expectations. Given the current level of the unemployment rate, we
have taken signal from the lack of infationary pressures by lowering our estimate of the equilibrium
rate of unemployment from 5.2 to 5.0 percent. Such a revision is also consistent with changes in the
age and education distributions of the labor force.

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The broad contours of the outlook have not changed materially. Steady improvements in the
labor market are restoring consumer confdence and should lead to continued gains in consumer
spending. This in turn should raise businesses’ confdence about the sustainability of the recovery and
generate more capital expenditures. We expect that the labor market improvements will ultimately
translate into a faster pace of household formation and residential investment growth. Still, residential
investment has been disappointing so far and more robust gains in housing remain a forecast at this
point. Overall, the projected pace of growth over the course of 2015-17 is modestly above potential,
with activity restrained by the dollar appreciation. As the economy approaches full employment,
we expect a more pronounced cyclical rebound in labor force participation, which should bring the
relationship between GDP growth and the unemployment rate more in line with historical norms.
As a result, we project a gradual decline in the unemployment rate, with the unemployment rate
reaching the 5 percent equilibrium level by 2017. At that time, core PCE infation is still expected to
run somewhat below target. In a context of growth modestly above potential and little infationary
pressures, monetary policy can a ord to be patient when removing accommodation. The gradual
removal of accommodation in our baseline outlook gives monetary policy the opportunity to probe for
lower equilibrium levels of the unemployment rate and/or the equilibrium real rate of interest than
we are currently assuming. It also provides room for a faster but disciplined pace of tightening should
infationary pressures materialize more rapidly than expected.
The risks to the growth outlook are becoming more balanced, even if it is still the case that policy
may not provide an adequate o set in the case of an adverse scenario. The unemployment rate has
declined so far more than we had expected, and there is a risk that this pattern will persist over the
forecast horizon. We continue to view the risks to the infation outlook as skewed to the downside, as
we factor in the possibility that the equilibrium unemployment rate is lower than 5 percent and that
long-run infation expectations are currently anchored at a level below target.
Respondent 7: Fundamentals supporting the expansion remain favorable, including highly accommodative monetary policy, improving household balance sheets, strengthening labor markets and
lower oil prices that support consumer spending, easing fscal headwinds, and further relaxation of
tight credit conditions. I anticipate that recent softness in some of the incoming monthly data will
prove to be transitory. Foreign central banks are adding accommodation, which should promote
stronger growth and higher infation rates abroad. My business contacts are optimistic, and a near
majority reported recently expanding staÿng levels. Overall, I see these forces contributing to abovetrend growth and some further improvement in labor markets. By the end of 2017, I project that the
economy will essentially be at its steady state.
The year-over-year headline PCE infation rate is likely to remain low in the near term due to the
impact of the oil price shock, but I anticipate very low infation readings to prove transitory as oil
prices stabilize. Core infation has edged down due in part to some pass-through of lower oil prices
and import prices but I expect it to stabilize and rise over the forecast horizon. In my judgment,
infation expectations remain anchored. The survey-based measures of infation expectations have
been relatively stable; I take less signal from measures of infation compensation based on asset prices
as these are likely refecting changes in risk or liquidity premia rather than infation expectations.
Anchored infation expectations along with an improving economy are consistent with infation moving
back to the 2 percent longer-run objective by late 2016 or early 2017. As infation increases and the
expansion continues, I expect wage growth to rise as well.
I view overall uncertainty as roughly comparable to historical norms of the last 20 years. As
described above, while there are a number of risks to my outlook, I view them as broadly balanced
for both the real economy and infation.
Respondent 8: There is a risk of a premature tightening of monetary policy that would degrade
our performance on infation.

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Respondent 9: After a bit of near-term weakness, I expect GDP growth to settle in at roughly
2 1/2 percent through 2016, before slowing toward its longer-run normal value. In my projection,
the unemployment rate continues to decline, reaching its longer-run normal value by late 2016, and
infation moves slowly back toward the Committee’s 2 percent longer-run objective. Key factors
propelling this continued expansion are: monetary policy that remains quite accommodative for some
time; a further easing of credit constraints and the continued repair of household balance sheets;
lower energy prices and the resulting boost to real income; and even a modest impetus from mildly
expansionary fscal policy. In addition, aggregate activity should be supported by a favorable selfreinforcing dynamic in which increased confdence that the economy is at last returning to normal
makes frms more willing to hire and invest and households more willing to consume and buy houses. I
view the acceleration in monthly payroll gains over the past year as a sign that this favorable dynamic
is probably already underway. These favorable forces are, however, o set to a degree by the recent
appreciation of the dollar and concerns about the foreign economic outlook, which are restraining
net exports and the broader economy through spillover e ects. Largely as a result, I have lowered
my estimate of real GDP growth in 2015 through 2017 a bit. I have made no material changes to
my assessment of supply-side conditions since December. With real GDP growing somewhat faster
than its potential rate, I expect the unemployment rate will fall gradually over time and modestly
undershoot its long-run rate in 2017. As slack is taken up, I anticipate that infation will gradually
move up to 2 percent (although not quite by 2017). In making this forecast, I assume that infation
expectations remain well-anchored despite the recent declines in market-based measures of infation
compensation, which I think have been temporarily depressed in part by declines in oil prices and
technical factors.
Respondent 10: My outlook consists of above-trend growth over the next few years, a further
reduction of labor market slack, and infation that gradually converges to target.
Growth over the medium term is primarily driven by stronger consumption growth, supported by
ongoing improvements in the labor market and a robust pace of disposable income growth, further
improvement in consumer sentiment, and lower energy prices. While lower oil prices negatively impact energy-related investment, conditions remain supportive for capital investment in other sectors.
Sluggish global growth and a strong dollar emerge as modest headwinds in my outlook, slowing export
growth and providing some restraint to domestic industrial activity.
The risks to my growth outlook have tilted to the downside. Further dollar appreciation and
weaker foreign GDP growth could restrain export growth and slow the pace of domestic industrial
activity more than I assume in my baseline outlook. I am also growing increasingly concerned that
the recent weak growth readings are not as transitory as I’ve assumed in my baseline.
The risks to my infation outlook have also tilted to the downside. Measures of underlying infation
are markedly softer than I had expected in December. Underlying infation appears to be well below
1.5 percent. Measures of infation compensation, which have rebounded some, are still below their
longer run averages and some professional forecasters in the SPF panel have lowered their longerrun infation expectations. Amid slack labor market conditions, it is possible that infation will fail
to return to target over the medium term. Sharply lower energy prices and a stronger dollar may
pass-through to core infation measure to a much greater degree than I’ve marked into my baseline
forecast.
Respondent 11: The economy is still recovering from the severe housing collapse and fnancial
crisis. Recoveries from these types of episodes are associated with sustained weakness in aggregate
demand through a variety of channels, which policy has only partially o set. Many of the associated
remaining headwinds are slowly easing:
• Housing has been and continues to be a headwind. However, with household balance sheets as
well as consumer credit conditions improving, I expect this to abate;

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• Policy uncertainty is back to fairly normal levels.
The one headwind that is not abating is global economic weakness. The relatively strong performance of the U.S. economy compared with that of the rest of the world, and subsequent monetary
easing in Europe and elsewhere, has resulted in an appreciation of the dollar. I expect this appreciation to be a drag on net exports and GDP growth. Together with continued geopolitical tensions,
deteriorating global growth remains a downside risk to my forecast.
In this environment, I expect the economic recovery will proceed at a solid pace. And with
substantial monetary stimulus still in play I expect output and unemployment gaps to close over the
next year. In terms of infation, continued slack in labor and goods markets and subdued commodity
and import prices should keep infation below the FOMC’s 2 percent infation target for the next
couple of years. Well-anchored infation expectations and diminishing slack eventually pull infation
back to our objective.
Respondent 12: (i) The relatively low rate of unemployment; (ii) the need to look through the temporarily very low rate of infation; (iii) the belief that operating at the lower bound, while comfortable,
is not optimal.
Respondent 13: My forecast for real GDP growth is characterized by above-trend growth of 2-1/2
percent in 2015 and 2-3/4 percent in 2016. Real GDP growth is supported by income growth from
rising employment and wages, rising household wealth, accommodative fnancing conditions, and the
ending of fscal drag. Real GDP growth is likely to slow in 2017 as the economy operates at full
capacity. As the remaining economic slack declines, I expect the unemployment gap to be closed
in 2016. My infation outlook projects a near-term decline, followed by a gradual rise in infation
coinciding with the removal of slack from the economy and the transitory e ects of dollar appreciation
and falling energy prices dissipating.
Respondent 14: Since the December SEP, we have seen a dichotomy in the economic data releases:
labor market indicators generally have been relatively robust, but the expenditures indicators generally
have been on the soft side and infation has run further below the FOMC’s objectives. Overall, we
have responded to these developments by making relatively little change to our real GDP growth
forecast, lowering the projected path for unemployment, and reducing the overall and core infation
forecasts.
We project growth of real GDP in 2015 and 2016 to be moderately above its potential rate.
Supported by a stronger labor market, low energy prices, and higher net worth, we see real PCE
growth remaining solid over the forecast horizon, although at a somewhat slower pace than in the
consensus of private forecasts. The relative strength of consumption is expected to support stronger
business investment growth than occurred in 2014Q4, despite weaker investment in oil exploration
and drilling stemming from lower oil prices. However, these positive developments are expected to be
o set by weaker net exports, as a stronger dollar leads to stronger import growth and slower export
growth. In 2017, most of the resource slack is expected to be dissipated, and thus we expect growth
to be near its potential rate.
With above-potential growth and a fat participation rate, we expect the unemployment rate
to continue to fall to 5.1% by 2015Q4 and then to 4.8% by 2016Q4, which is modestly below our
estimate of the longer-run normal unemployment rate (5%). The small undershoot of unemployment
occurs under our assumption of appropriate policy because with infation currently substantially below
the FOMC’s objective and unemployment relatively close to its longer-run rate, that undershoot
contributes to a faster return of infation to objective, consistent with the balanced approach. In
addition, our analysis indicates that current resource slack probably is larger than that indicated by
the unemployment gap. With growth at potential and the policy rate below its longer-run normal
value, we anticipate that the unemployment rate will remain below 5% in 2017 before it rises back

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to 5% in subsequent years. Even though we project a lower unemployment rate path, there is still
notable probability that it could decline somewhat more than anticipated over the forecast horizon.
Based on oil futures markets, we anticipate that oil prices have bottomed out and will gradually
rise over the forecast horizon. Thus, while the total PCE infation is likely to be -2% (annual rate) in
2015Q1, we expect it to rise over the next two years such that it is 1 1/2 - 1 3/4% in 2016, due to declining
slack, accommodative policy, and the gravitational pull of well-anchored infation expectations. The
core PCE defator is expected to rise at about a 1 1/4% annual rate over 2015 and about 1 1/2% over
2016 as declining prices for nonpetroleum imports depress goods prices. In 2017, we expect both
overall and core PCE infation to be 2%, refecting the dissipation of slack, continued accommodative
policy, some rises in marginal costs of production, and well-anchored long-term infation expectations
that act as a gravitational force pulling infation toward the FOMC’s long-term objective.
The near-term risks to the forecast for growth appear to be reasonably well balanced. With
an improving labor market and better sentiment, we could see a stronger growth of both consumer
spending and housing in 2015 and 2016 than we now expect. If so, that would likely provide an
additional boost to business investment spending. However, the U.S. economy may be more negatively
a ected by dollar appreciation than assumed in our central forecast and we may be underestimating
the downside e ects of reduced energy exploration and production. The risks to the infation forecast
also appear to be roughly balanced. The disinfationary e ect of dollar appreciation may be stronger
than we have anticipated. However, it is possible the slack may be reduced more quickly and begin
to have a stronger impact on infation than we have anticipated.
Respondent 15: Accommodative monetary policy, continued improvement in household and business balance sheets and access to credit, the diminution of fscal restraint, and lower energy prices
should allow domestic demand to gain momentum as we move through the projection period. Pent-up
demand for capital goods and consumer durables should provide further impetus to growth. The
sizable appreciation of the dollar will likely constrain growth in net exports.
These fundamental factors supporting activity are assumed to generate growth moderately above
potential over the next 2 years. As monetary policy normalizes and cyclical dynamics run their course,
growth moderates back towards potential in 2017. Our path for GDP closes resource gaps by the end
of 2016. Resource slack thus is expected to exert a diminishing downward infuence on infation as we
move through the projection period; furthermore, we assume infation will be pulled up by infation
expectations. In order to achieve our infation target, we assume policy normalization does not begin
until the one- to two-year-ahead infation outlook is clearly headed back towards 2 percent, and that,
at least initially, the path for rate increases will be shallow. Given the normal inertia in the infation
process, we could well see some modest overshooting of target beyond the projection horizon.
See the description of uncertainties and risks in section 2(b) above. In addition to those factors,
there is a good deal of uncertainty over how resilient the economy will be to the removal of monetary
accommodative and over the potential for infation to rise more rapidly as growth gains momentum.
However, as noted in 3(c) above, we see the costs of premature rate increases substantially weighing
on activity and infation and potentially pushing us back to the zero lower bound as being much higher
than those of infation moving up more quickly than anticipated. We have set our monetary policy
assumptions accordingly, with a 2016 lifto and shallow path for rate increases, to better balance the
probability weighted costs.
Respondent 16: Highly accommodative monetary policy, improved household fnances, reduced
fscal drag, and tame commodity prices have given us a rapidly improving labor market. Wage
growth has gradually increased, and is likely to rise at an increasing rate with further reductions in
the unemployment rate. Faster wage gains, rapid job growth and continued low consumer energy
prices will boost real household income and spending, contributing to a cycle of rising demand and
employment.

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Progress toward price stability is best measured by the recent history and near-term expected
trajectory of a core infation measure, such as the Dallas Fed’s trimmed-mean PCE infation gauge.
Fluctuations in headline infation in response to supply-side shocks are inevitable and, indeed, desirable. They should not be a concern as long as nominal demand is projected to remain on a track
consistent, over the longer term, with our 2 percent infation objective.
Downside risks center on a rapidly cooling Chinese property market, confict and tensions in the
Middle East and Ukraine, and the fraying of public confdence in Euro-area institutions and policies.
Recent government and central-bank policy actions raise hopes that these hazards will be avoided.
Respondent 17: Population growth in prime working ages will be below 0.5 percent each year. Real
GDP per employee has risen by less than 1 percent annually over the last 3 years and is not likely to
accelerate dramatically over the forecast horizon. My estimate of the medium-term trend in real GDP
is accordingly 1 3/4 percent, well below what we have experienced in the past. My projection for the
next 3 years is that consumer spending will be robust, leading to GDP growth that is modestly above
trend and to improving labor market conditions.

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Forecast Narratives (continued)
4(b). Please describe the key factors causing your forecasts to change
since the previous SEP.
Respondent 1: As noted above, somewhat weaker data and some deterioration in global economic
environment.
Respondent 2: N/A
Respondent 3: In the near term, stronger-than-expected momentum in the labor market and still
subdued wage and price infation raise the possibility that the natural rate is lower than previously
thought, which led a downward revision of the unemployment rate. The appreciation of the dollar led
me to revise down GDP growth and infation over the medium term.
Respondent 4: N/A
Respondent 5: The decline in oil prices and their likely reversal have a ected my near-term infation
forecasts. My forecasts of unemployment for this year and next year have been a ected by the
continued improvements in labor market indicators.
Respondent 6: The GDP growth forecast is somewhat slower than in the previous projections,
mainly as a result of a larger dollar appreciation. The downward revision to potential GDP growth
is also playing some role. Still, the projected level of the unemployment rate by the end of 2017 is
only marginally higher in the present forecast. Similarly, revisions to the medium-term outlook for
infation have been minor.
Respondent 7: The contours of my forecast are little changed from the previous SEP. I have
reduced my near-term infation forecast in light of recent infation readings that refect the large oil
price decline. I expect the e ects of the oil price decline on infation to be transitory as oil prices
stabilize. I continue to anticipate that infation will gradually return to our target, given the underlying
strength in the real economy. The unemployment rate has moved down slightly more than expected,
causing me to slightly lower the path for the unemployment rate this year and next. My GDP growth
projection is generally little changed.
Respondent 8: Infation has run even lower than I had anticipated, and I have taken on board the
sta ’s pessimism regarding the infuence of the exchange value of the dollar on economic outcomes.
Respondent 9: My forecasts for unemployment, infation, and the path of the federal funds rate
have changed only a little since December, although I have reduced for forecast for real GDP growth
on average in response to the weaker tone of incoming spending and production data and the apparent
drag on real activity from the dollar.
Respondent 10: I have marked down my growth forecast in 2015 modestly in response to softer
than expected spending data for the frst quarter and a further appreciation of the dollar since the
December FOMC meeting. The dollar has appreciated by roughly 5 percent since December and net
exports were more of a drag on fourth quarter growth than I was anticipating. I now expect sluggish
global conditions and the stronger dollar to act as modest headwinds, tamping down the outlook
for export growth and industrial activity through 2016. I continue to expect the current low level

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of energy prices to persist throughout the forecast horizon which will provide a boost to consumer
spending over the medium term. Partly o setting that boost is weakness in energy-related investment,
which, based on oil drilling activity, fell sharply in the frst quarter. I have lowered my 2015 infation
projections signifcantly in response to the decline in energy prices and softer readings on underlying
infation than I had expected as of the December meeting.
Although the unemployment rate has fallen close to my previous estimate of its longer-run level,
this has not been accompanied by clear signals of increasing price or wage pressures. Therefore, I
have lowered my estimate for the long-run unemployment rate to 5.0 percent. This adjustment more
closely aligns my judgment of the amount of labor market slack with my estimate of the output gap.
Respondent 11: Since December, I have made only modest changes to the broad contours of my
forecast. My forecast for GDP growth in 2015 (Q4/Q4) is slightly lower, partly in response to the
recent severe weather in much of the country. I have revised down my GDP growth forecast slightly
for 2016 in response to the further appreciation of the dollar since the previous SEP. Also, I have
revised down slightly my forecast of the unemployment rate for 2015 and 2016 in light of the stronger
employment data. With very accommodative policy I expect unemployment to undershoot the NAIRU
for a period.
In addition, recent declines in commodity, energy, and import prices will put substantial downward
pressure on headline infation. Because of this, I now expect headline infation to run more substantially below our 2 percent target over the next two years than in December. I expect these commodity,
energy, and import price movements to have a much smaller e ect on core infation and to be largely
o set by a somewhat greater degree of frming in wage infation. Thus, I have made little change to
my medium-term outlook for core infation.
Respondent 12: See 3(i) and 3(ii) above.
Respondent 13: The information received since December has led me to revise down my forecasts
for real GDP growth, PCE infation, core PCE infation, and the unemployment rate. Specifcally, the
downward revisions in 2015 PCE infation and core PCE infation refect the transitory e ects of the
recent shifts in energy prices and foreign exchange rates. In addition, I have reduced my estimate of
the longer-run level of the unemployment from 5.5 percent to 5.2 percent, which reduces the upward
pressure on the infation rate in 2016 and 2017.
Respondent 14: For real GDP growth, the further appreciation of the dollar has led to a larger
and more persistent negative contribution from net exports in our projection. Some of those negative
e ects are o set by the positive e ects of lower oil prices and higher net worth on personal consumption
expenditures. At the same time, much of the consumption and expenditure data received since
December have been soft, leading to a somewhat lower projected path of fnal demand in the near
term. Overall, these changes have led to modestly lower real GDP growth in 2015, but little net
change in 2016.
The labor market was again stronger than we expected in December, with the unemployment
rate declining somewhat more than we had projected. Consequently, our projected path for the
unemployment rate is below that of the December SEP, with the unemployment rate falling below
our point estimate of the longer-run natural rate. With the change in the unemployment path, our
projected path for the participation rate now is quite fat, which is more consistent with the recent
trend in the data.
Both overall and core infation has been running below our previous projections, leading us to
lower our projected paths for both variables. The behavior of alternative measures of underlying
infation also is consistent with a lower infation path over the next two years. In part, the lower
path for infation refects the impacts of the further decline in energy prices and of the appreciation

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of the dollar. However, despite the further fall in market-based infation compensation through the
end of January, we continue to assume that infation expectations remain anchored at the FOMC’s
longer-run objective. The objectives of avoiding falling into the low infation trap and to keep infation
expectations anchored were factors behind the changes to our projected unemployment and FFR paths
under appropriate policy.
Respondent 15: As noted earlier, we revised down our assumptions for the long run unemployment
and federal funds rates. In addition, recent data have caused us to revise down our growth forecast for
early 2015. Our forecast for 2016 growth is also lower largely due to the higher dollar. Our path for
unemployment is down from December, refecting a lower starting point as well as our lower natural
rate. We slightly reduced our forecasts of core infation in light of recent data and made larger changes
in our near term total infation outlook to refect the drop in energy prices.
Respondent 16: I have revised my real growth projections downward, slightly, refecting a more
realistic view of likely growth in the working-age population and my belief that most of the declines
we’ve seen in labor-force participation are unlikely to be reversed. My unemployment projections are
unchanged. The stronger dollar and lower price of oil have had a larger impact on both headline
and conventional core infation than I had anticipated last December, and I have revised my nearterm infation projections accordingly. I have made only small adjustments to my assessment of the
appropriate funds-rate path.
Respondent 17: N/A

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Forecast Narratives (continued)
4(c). Please describe any important di erences between your current
economic forecast and the Tealbook.
Respondent 1: No major di erences – only a few tenths of a percentage point one way or the other.
Respondent 2: N/A
Respondent 3: I expect greater continued movement in the dollar and greater e ects of exchange
rate movements on both net exports and core infation due to lower core import prices.
Respondent 4: My forecast calls for stronger growth, somewhat higher infation, and tighter monetary policy over the forecast horizon than the Tealbook.
Respondent 5: My forecast is for more rapid GDP growth during 2015 than in the Tealbook (3.1%
vs. 2.2%) and a lower unemployment rate (4.8% vs. 5.2%). Related to unemployment, I also see the
unemployment rate declining further below its long-run value before reversing course and reaching its
long-run value. This long-run value of 5.8% exceeds the Tealbook forecast of 5.2%. With respect to
infation, my forecast for both headline and core measures includes an overshooting before reaching
2.0%; in contrast, the Tealbook has both infation measures moving to 2.0% without any overshooting.
Respondent 6: The two forecasts are conditioned on broadly similar policy assumptions, and have
similar outcomes both in terms of economic activity and infation.
Respondent 7: My forecast is somewhat stronger than the March Tealbook forecast. Like the
Tealbook I expect that GDP growth will proceed at an above-trend pace in 2015 and 2016 and the
unemployment rate will continue to decline. (I note that my trend growth rate is higher than the
Tealbook’s.) My forecast calls for somewhat more infationary pressure than the Tealbook forecast:
I expect that infation will return to our 2 percent longer-term objective by late 2016 or early 2017.
Compared with Tealbook, this frmer path for infation calls for a steeper path for the funds rate.
Respondent 8: N/A
Respondent 9: I believe that the natural rate of unemployment is a bit lower than the sta estimates, but this is a minor di erence.
Respondent 10: My growth forecast now runs roughly 1/2 percentage point above the Tealbook
throughout the forecast horizon, mostly due to our di ering perspectives on potential GDP growth. My
unemployment rate projection is identical to Tealbook’s path throughout the medium term. However,
I lowered my estimate for the long-run unemployment rate to 5.0 percent as I have yet to see any
material wage or price pressure despite an (U-3) unemployment rate that has already fallen to 5.5
percent. My headline and core infation forecasts run about 1/4 percentage point above the Tealbook
over the forecast horizon, as it is still my view that infation expectations remain at a target-consistent
level of 2 percent.
Respondent 11: My forecast is broadly similar to the Tealbook projection. One notable di erence
is that the Tealbook has a much more protracted return of infation to the FOMC’s stated 2 percent
objective. Also, the Tealbook has somewhat slower GDP growth in 2015 than I do, though I broadly
share the Tealbook’s view on GDP growth after 2015.

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SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Respondent 12: There are no important di erences.
Respondent 13: The appropriate path for the federal funds rate in 2015, 2016, and 2017 in my
forecast is slightly above the Tealbook forecast. Nevertheless, I expect somewhat faster real GDP
growth, somewhat lower unemployment, and somewhat higher infation than Tealbook during the
forecast horizon. In addition, since I have not fully taken on board the productivity slowdown in
Tealbook, my estimate of longer-run real GDP growth is higher than Tealbook’s estimate.
Respondent 14: Since December, the Tealbook forecast for real GDP growth has been reduced
more than our forecast, such that real growth in the Tealbook forecast is now below that in our
forecast, particularly in 2016. For that year, the major reason for the di erence appears to be that
the Tealbook projects a larger e ect of dollar appreciation on net exports than we have, suggesting
that the Tealbook has more persistent e ects than in our models.
Otherwise on the real side, the di erences are principally more in the details. Among such details,
one long-standing di erence regards business fxed investment. The Tealbook projects slower growth
in business fxed investment in 2015-16 than in our forecast; the reason for this di erence is not
immediately clear, but it may in part refect the Tealbook assessment that the capital stock is fairly
close to levels consistent with its downwardly-revised assessment of potential growth. This factor is
o set by faster consumption growth in the Tealbook forecast, another long-standing di erence with
our forecast, which in part refects stronger wealth e ects in the Tealbook forecast.
Because we both now project a small undershoot of the unemployment rate, our forecast relative to
our estimate of the longer-run natural rate is similar to the Tealbook’s forecast relative to its estimate
of the longer-run rate. Therefore, the di erence between the paths of the unemployment rate refects
the Tealbook’s higher estimate of the longer-run rate (5 1/4%) than in our forecast (5%).
For infation, the two forecasts are similar in 2015-16. A di erence arises in 2017, where we expect
infation to be at the FOMC’s objective while the Tealbook projects that infation will not reach that
level until 2019. This di erence refects di ering views about infation dynamics. In the Tealbook,
with the underlying infation rate below the FOMC longer-run objective and considerable persistence
in the infation process, a prolonged period of low unemployment (and a positive output gap) appears
to be necessary to induce infation to rise toward the longer-run infation goal. The faster return of
infation to its goal in our forecast refects our assumptions of less infation persistence and of the
stronger attraction provided by anchored infation expections.
Unlike the Tealbook, we do not yet assess that the longer-run potential GDP growth rate has
declined, although we are assessing this assumption more frequently than previously has been our
custom.
The change in the Tealbook’s assumptions about the equilibrium real FFR and the longer-run
level of the nominal FFR means that the Tealbook’s assumptions now match ours.
In terms of the uncertainty and risk assessment, we see some di erences between the two projections. On the real side, we continue to see higher uncertainty than normal whereas the Tealbook
sees uncertainty at near normal levels. This assessment refects our view that the unusual nature of
the current expansion, the atypical policy environment in the U.S. and many foreign economies, and
the yet-unclear net e ects of lower oil prices and of dollar appreciation leave uncertainty about real
activity above the SEP standard associated with the 20-year window of forecast errors. In another
contrast, we see the risks around the real activity projections as roughly balanced rather than tilted to
the downside as in the Tealbook. The stronger growth in 2014H2 and the indications that private fnal
domestic demand still has been well maintained into 2015 (despite some of the weaker expenditure
data) signal a signifcant risk that stronger expansion dynamics have been established. Furthermore,
the possibility of a positive supply shock associated with lower energy prices also o sets the negative
risks cited by the Tealbook. As for infation, although our uncertainty assessment is similar to the
Tealbook, we still see the risks as roughly balanced: although the decline in longer-term infation

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SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

compensation and low infation in other areas of the world pose downside risks to the forecast, the
possibility that slack could be dissipated more quickly than anticipated o sets those risks.
Respondent 15: We assume that the frst increase in the funds rate will occur early in 2016, three
quarters later than the Tealbook. Our rate of increase after lifto is similar. Accordingly, at the end
of the projection period our assumed level of the funds rate only reaches 2.63 percent.
Our projection for growth in 2015-2017 averages about 1/2 percentage point stronger than the
Tealbook. Much of the di erence refects our somewhat faster assumption for the growth rate in
potential output over that period. Both our forecast of actual unemployment and our estimates of
its natural rate are somewhat lower than the Tealbook. Our projection for infation is similar to the
Tealbook.
Respondent 16: I believe longer-term infation expectations are currently well anchored at a rate
consistent with the Committee’s infation objective, I’m convinced that in the near term infation
responds to changes in slack as well as the level of slack, and I prefer to use the trimmed-mean as
my measure of core infation, rather than strip out food and energy price increases. For all of these
reasons, I see infation rising farther and faster than does the Tealbook.
At the same time, I believe that increases in the unemployment rate are diÿcult to contain once
they begin. An implication is that the risks to misestimating slack are asymmetric: It is substantially
more dangerous to overestimate slack than to underestimate it.
Because I anticipate a higher infation path than does the Tealbook, and because I see both
substantially less beneft from overshooting full employment and substantially greater risk, I believe
it is appropriate for monetary policy to move more rapidly to a neutral policy stance.
Respondent 17: Infation is likely to move back toward 2 percent with more alacrity than in the
Tealbook, and containment of infationary pressures over time will require somewhat more rapid policy
tightening.

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SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Figure 3.A. Distribution of participants’ projections for the change in real GDP, 2015–17 and over the longer run
Number of participants

2015

December
Tealbook

Updated
March
Tealbook

1.8 1.9

2.0 2.1

2.2 2.3

2.4 2.5

March projections
December projections

2.6 2.7

2.8 2.9

3.0 3.1

18
16
14
12
10
8
6
4
2

3.2 3.3

Percent range
Number of participants

2016

December
Tealbook

March
Tealbook

1.8 1.9

2.0 2.1

2.2 2.3

2.4 2.5

2.6 2.7

18
16
14
12
10
8
6
4
2
2.8 2.9

3.0 3.1

3.2 3.3

Percent range
Number of participants

2017

March
Tealbook

18
16
14
12
10
8
6
4
2

December
Tealbook

1.8 1.9

2.0 2.1

2.2 2.3

2.4 2.5

2.6 2.7

2.8 2.9

3.0 3.1

3.2 3.3

Percent range
Number of participants

Longer run
March
Tealbook

December
Tealbook

1.8 1.9

2.0 2.1

18
16
14
12
10
8
6
4
2
2.2 2.3

2.4 2.5

2.6 2.7

Percent range

Note: Definitions of variables are in the general note to table 1.

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2.8 2.9

3.0 3.1

3.2 3.3

SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Figure 3.B. Distribution of participants’ projections for the unemployment rate, 2015–17 and over the longer run
Number of participants

2015
March projections
December projections

4.4 4.5

4.6 4.7

18
16
14
12
10
8
6
4
2

March and December
Tealbook

4.8 4.9

5.0 5.1

5.2 5.3

5.4 5.5

5.6 5.7

5.8 5.9

Percent range
Number of participants

2016

March and December
Tealbook

4.4 4.5

4.6 4.7

4.8 4.9

5.0 5.1

18
16
14
12
10
8
6
4
2
5.2 5.3

5.4 5.5

5.6 5.7

5.8 5.9

Percent range
Number of participants

2017

4.4 4.5

4.6 4.7

December
Tealbook

March
Tealbook

4.8 4.9

5.0 5.1

18
16
14
12
10
8
6
4
2
5.2 5.3

5.4 5.5

5.6 5.7

5.8 5.9

Percent range
Number of participants

Longer run

4.4 4.5

March and December
Tealbook

4.6 4.7

4.8 4.9

5.0 5.1

5.2 5.3

Percent range

Note: Definitions of variables are in the general note to table 1.

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18
16
14
12
10
8
6
4
2
5.4 5.5

5.6 5.7

5.8 5.9

SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Figure 3.C. Distribution of participants’ projections for PCE inflation, 2015–17 and over the longer run
Number of participants

2015
March
Tealbook

March projections
December projections

December
Tealbook

18
16
14
12
10
8
6
4
2

0.5 0.6

0.7 0.8

0.9 1.0

1.1 1.2

1.3 1.4

1.5 1.6

1.7 1.8

1.9 2.0

2.1 2.2

2.3 2.4

Percent range
Number of participants

2016

March and December
Tealbook

18
16
14
12
10
8
6
4
2

0.5 0.6

0.7 0.8

0.9 1.0

1.1 1.2

1.3 1.4

1.5 1.6

1.7 1.8

1.9 2.0

2.1 2.2

2.3 2.4

Percent range
Number of participants

2017

March
Tealbook

18
16

December
Tealbook

14
12
10
8
6
4
2

0.5 0.6

0.7 0.8

0.9 1.0

1.1 1.2

1.3 1.4

1.5 1.6

1.7 1.8

1.9 2.0

2.1 2.2

2.3 2.4

Percent range
Number of participants

March and December
Tealbook

Longer run

18
16
14
12
10
8
6
4
2

0.5 0.6

0.7 0.8

0.9 1.0

1.1 1.2

1.3 1.4

1.5 1.6

Percent range

Note: Definitions of variables are in the general note to table 1.

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1.7 1.8

1.9 2.0

2.1 2.2

2.3 2.4

SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Figure 3.D. Distribution of participants’ projections for core PCE inflation, 2015–17
Number of participants

2015
March
Tealbook

December
Tealbook

March projections
December projections

18
16
14
12
10
8
6
4
2

1.1 1.2

1.3 1.4

1.5 1.6

1.7 1.8

1.9 2.0

2.1 2.2

2.3 2.4

Percent range
Number of participants

2016
March and December
Tealbook

18
16
14
12
10
8
6
4
2

1.1 1.2

1.3 1.4

1.5 1.6

1.7 1.8

1.9 2.0

2.1 2.2

2.3 2.4

Percent range
Number of participants

2017
March and December
Tealbook

18
16
14
12
10
8
6
4
2

1.1 1.2

1.3 1.4

1.5 1.6

1.7 1.8

Percent range

Note: Definitions of variables are in the general note to table 1.

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1.9 2.0

2.1 2.2

2.3 2.4

SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Figure 3.E. Distribution of participants’ judgments of the midpoint of the appropriate target range for the federal funds
rate or the appropriate target level for the federal funds rate, 2015-17 and over the longer run
Number of participants

2015
March projections
December projections

March
Tealbook

18
16
14

December
Tealbook

12
10
8
6
4
2

0.00 0.37

0.38 0.62

0.63 0.87

0.88 1.12

1.13 1.37

1.38 1.62

1.63 1.87

1.88 2.12

2.13 2.37

2.38 2.62

2.63 2.87

2.88 3.12

3.13 3.37

3.38 3.62

3.63 3.87

3.88 4.12

4.13 4.37

Percent range
Number of participants

2016
18

March
Tealbook

16
14

December
Tealbook

12
10
8
6
4
2

0.00 0.37

0.38 0.62

0.63 0.87

0.88 1.12

1.13 1.37

1.38 1.62

1.63 1.87

1.88 2.12

2.13 2.37

2.38 2.62

2.63 2.87

2.88 3.12

3.13 3.37

3.38 3.62

3.63 3.87

3.88 4.12

4.13 4.37

Percent range
Number of participants

2017
18

March
Tealbook
December
Tealbook

16
14
12
10
8
6
4
2

0.00 0.37

0.38 0.62

0.63 0.87

0.88 1.12

1.13 1.37

1.38 1.62

1.63 1.87

1.88 2.12

2.13 2.37

2.38 2.62

2.63 2.87

2.88 3.12

3.13 3.37

3.38 3.62

3.63 3.87

3.88 4.12

4.13 4.37

Percent range
Number of participants

Longer run
March
Tealbook

18
16
14

December
Tealbook

12
10
8
6
4
2

0.00 0.37

0.38 0.62

0.63 0.87

0.88 1.12

1.13 1.37

1.38 1.62

1.63 1.87

1.88 2.12

2.13 2.37

2.38 2.62

2.63 2.87

2.88 3.12

3.13 3.37

3.38 3.62

3.63 3.87

3.88 4.12

4.13 4.37

Percent range

Note: The midpoints of the target ranges for the federal funds rate and the target levels for the federal funds rate
are measured at the end of the specified calendar year or over the longer run.

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SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Figure 4. Uncertainty and risks in economic projections

Number of participants

Uncertainty about GDP growth

Risks to GDP growth

March projections
December projections

Lower

Broadly
similar

Number of participants

March projections
December projections

18
16
14
12
10
8
6
4
2

Higher

Weighted to
downside

Broadly
balanced

Number of participants

Uncertainty about the unemployment rate

18
16
14
12
10
8
6
4
2

Weighted to
upside
Number of participants

Risks to the unemployment rate
18
16
14
12
10
8
6
4
2

Lower

Broadly
similar

18
16
14
12
10
8
6
4
2

Higher

Weighted to
downside

Broadly
balanced

Number of participants

Uncertainty about PCE inflation

Weighted to
upside
Number of participants

Risks to PCE inflation
18
16
14
12
10
8
6
4
2

Lower

Broadly
similar

18
16
14
12
10
8
6
4
2

Higher

Weighted to
downside

Broadly
balanced

Number of participants

Uncertainty about core PCE inflation

Weighted to
upside
Number of participants

Risks to core PCE inflation
18
16
14
12
10
8
6
4
2

Lower

Broadly
similar

Higher

18
16
14
12
10
8
6
4
2

Weighted to
downside

Note: Definitions of variables are in the general note to table 1.

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Broadly
balanced

Weighted to
upside

SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Figure 6. Projections of GDP, unemployment, and PCE inflation in the quarter of liftoff

PCE
inflation

4.5

5.0
5.5
Unemployment rate

PCE
inflation

2.0

2.0

1.5

1.5

1.0

1.0

0.5

0.5

0.0

0.0

−0.5

−0.5

6.0

2.0

2.5
3.0
Change in real GDP

3.5

Unemployment
rate
6.0

Year and Quarter of Firming
5.5

2015Q2
2015Q3
2015Q4
2016Q1
5.0

2016Q4

4.5

2.0

2.5
3.0
Change in real GDP

3.5

Note: When the projections of two or more participants are identical, larger markers, which represent one participant each, are used so that each projection can be seen.

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SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Figure 7. Projections of GDP, unemployment, and core PCE inflation in the quarter of liftoff

Core PCE
inflation

4.5

5.0
5.5
Unemployment rate

6.0

Core PCE
inflation

2.0

2.0

1.5

1.5

1.0

1.0

2.0

2.5
3.0
Change in real GDP

3.5

Year and Quarter of Firming
2015Q2
2015Q3
2015Q4
2016Q1
2016Q4

Note: When the projections of two or more participants are identical, larger markers, which represent one participant each, are used so that each projection can be seen.

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SEP: Compilation and Summary of Individual Economic Projections

March 17–18, 2015

Figure 8. FOMC participants’ assessments of appropriate liftoff year and quarter

Number of participants

Appropriate timing of liftoff
9
8
8
7
6
6
5
4
3
2
1

1

1
1

2015Q2

2015Q3

2015Q4

2016Q1

2016Q2

2016Q3

2016Q4

Note: In the upper panel, the height of each bar denotes the number of FOMC participants who judge that, under
appropriate monetary policy, the first increase in the target range for the federal funds rate from its current range of 0
to 1/4 percent will occur in the specified calendar year and quarter.

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