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Joining the Dots: The FOMC and the future path of policy rates

Author

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  • Gerlach, Stefan

    (BSI Bank and CEPR)

  • Stuart, Rebecca

    (Central Bank of Ireland)

Abstract

The Federal Reserve publishes since 2012 Federal Open Market Committee (FOMC) members' views regarding what federal funds rate will be necessary for the FOMC to achieve its statutory targets. The views or "projections" pertain to the end of the current and the next two or three years, and the "longer run." We use a simple model to interpolate the projections between these discrete points in time, estimate the interest rates one, two and three years ahead, and study how they evolve with macroeconomic conditions. News regarding the labour market, but not inflation, effects the projections in the sample period.

Suggested Citation

  • Gerlach, Stefan & Stuart, Rebecca, 2016. "Joining the Dots: The FOMC and the future path of policy rates," Research Technical Papers 08/RT/16, Central Bank of Ireland.
    • Handle: RePEc:cbi:wpaper:08/rt/16
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    References listed on IDEAS

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    Cited by:

    1. Gerlach, Stefan & Stuart, Rebecca, 2019. "Plotting interest rates: The FOMC's projections and the economy," Journal of Macroeconomics, Elsevier, vol. 60(C), pages 198-211.
    2. Gerlach, Stefan & Stuart, Rebecca, 2018. "What Drives the FOMC’s Dot Plots?," CEPR Discussion Papers 13117, C.E.P.R. Discussion Papers.
    3. Gerlach, Stefan & Stuart, Rebecca, 2018. "Plotting interest rates: The FOMC’s projections and the economy," CEPR Discussion Papers 12768, C.E.P.R. Discussion Papers.
    4. Charalampidis, Nikolaos, 2020. "On unemployment cycles in the Euro Area, 1999–2018," European Economic Review, Elsevier, vol. 121(C).

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    More about this item

    Keywords

    Federal Reserve; monetary policy; interest rate expectations; interpolation;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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