In an effort to increase transparency after the Great Recession, one of the Federal Open Market Committee communication initiatives under Chairman Ben Bernanke was to publish individual members’ assessments of the economy in the Summary of Economic Projections. In this week’s MBA Chart of the Week, we track changes in policymakers’ quarterly published SEP forecasts of the federal funds rate over the past eight quarters.
In its final policy meeting of an eventful year, the Federal Open Market Committee on Wednesday raised the federal funds rate for the seventh straight meeting, but by 50 basis points instead of 75 basis points, as it had for the past four times.
In response to inflation continuing to run well above its target of 2%, the Federal Reserve this week again raised the federal funds target by 75 basis points. Now at 3%, the rate above what most FOMC members consider to be the long-term level and should be effective in reducing demand and slowing inflation over time.
The Federal Open Market Committee on Wednesday said it would speed up its tapering of agency mortgage-backed securities and hinted its timetable for raising the federal funds rate could move up as well.