Banking & Finance

FOMC Alters Long-Term Targets: Rates, GDP, Inflation, Unemployment

The FOMC’s statement today is going to be clarified a bit further if you look at the comments from Ben Bernanke and friends that came out at 2 PM EST today.  What is important to know is that while the FOMC kept the FOMC language as exceptionally low through at least late in 2014, the real opinions are a bit different and some of the targets have been altered.

Today’s news is that 9 of 17 officials see rates at or below 1.0% through the end of 2014.  That is not a promise not to raise rates, but that is indicative of exceptionally low remaining at 1% or under for that ‘extended period.’  It is also worth noting that 7 Fed officials rather than the prior number of 5 Fed officials see rate hikes starting in 2014.

GDP is being put in a range of 2.4% to 2.9% in 2012, 2.7% to 3.1% in 2013 , and 3.1% to 3.6% in 2014.  Longer-run GDP growth is being put at 2.3% To 2.6%.  This is a slight economic downgrade but the unemployment rate is being talked down on the flip-side.

The Fed sees unemployment coming back into a range of 5.2% to 6.0% in the longer-run with the following unemployment targets now: 7.8% to 8.0% in 2012; 7.3% to 7.7% in 2013; and 6.7% to 7.4% in 2014.

The Federal Reserve is also putting longer-term inflation around 2.0%, but Cor-inflation is being targeted as follows: 1.8% to 2.0% in 2012; 1.7% to 2.0% in 2013; and 1.8% to 2.0% in 2014.

Remember, the Federal Reserve and FOMC have the dual-mandate of helping to keep the economy at full employment while keeping a cap on inflation.

JON C. OGG

Sponsored: Tips for Investing

A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.