Fed’s Rosy Outlook Snubs History
Goldilocks herself would blush at the near-perfect jobs and inflation scenario forecast by the central bank.
The Fed has a Goldilocks-like view of the future of the economy.
Photographer: Gareth Cattermole/Getty Images EuropeFederal Reserve officials meet Thursday to discuss monetary policy, and while no one expects the central bank to boost interest rates at this time, there's sure to be a lot of interest in how they address the recent turbulence in financial markets in light of their Goldilocks-like outlook for the economy. In other words, something has to give.
The minutes of Fed’s Sept. 25-26 meeting revealed that a cadre of Federal Open Market Committee members advocated for pushing the federal funds rate, currently in a range of 2 percent to 2.25 percent, to beyond what is considered a neutral level into territory that restricts economic growth. Fed Chairman Jerome Powell puts the neutral rate somewhere in the neighborhood of 3 percent. That’s predicated on the unemployment rate staying below 4 percent through 2021 and inflation remaining at an idyllic 2.1 percent level.