Economics
Fed's Updated Model of Economy Suggests It's Time to Raise Rates
- `Output gap appears closed,' Barclays economist Gapen says
- Data may give clues to why Fed highlighted December option
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The Federal Reserve Board released an updated version of its large-scale model on the U.S. economy that may hold clues into why policy makers pivoted at their meeting earlier this week toward a December interest-rate increase.
The revised inputs and calculations on Friday suggest the economy will use up resource slack by the first quarter of 2016, according to an analysis by Barclays Plc, and that also indicates Fed staff lowered their near-term estimate for how fast the economy can grow without producing inflation -- a concept known as potential growth.