The Fed Awakens

I got the following from a friend at J. P. Morgan just a few minutes ago. You might have had something like it hit your inbox as well.
WASHINGTON – Federal Reserve officials said Wednesday they expect a more gradual pace of short-term interest rate increases in coming years than they did three months ago.
They also tweaked very modestly their views on the outlook for the economy, according to forecasts released after the conclusion of the Fed’s two-day policy meeting. Officials made small changes in their views of future economic activity, and they still don’t expect to achieve their 2% inflation rise target until 2018.
Clearly not a surprise and in line with what I’ve recently been saying. I think the Fed is going to be raising rates a lot more slowly than even they project. When you look at the ‘dots,’ the median projection for the Fed funds rate is 3.75% in the much longer run.
Side bet? I think we see 0% again before we see 2%. I’ll take the overs on that bet, thank you very much. If you make the number 3%, I’ll even give you odds.
Today’s Outside the Box is from my friend Danielle DiMartino Booth, who used to work at the Dallas Fed for Richard Fisher. She has gone out on her own and has begun to write occasional pieces that seem hit my inbox at least weekly. The cover a wide range of topics, but many of them deal with the Fed.

This post was published at Mauldin Economics on DECEMBER 16, 2015.