On February 27, the Board of Governors of the Federal Reserve System released its semiannual Monetary Policy Report to the Congress. The report indicated that policymakers “are expecting the economy to begin to recover this year from the mild downturn experienced in 2001,” but “the pace of expansion is likely to increase only gradually over the course of the year, and the unemployment rate is expected to move higher for a time.” Furthermore, diminished resource utilization, indirect effects of previous energy price declines on firms’ costs, and continued competitive pressures “all ought to restrain the pace of price increases outside of the energy sector this year.” The central tendency of forecasts for 2002 is for real GDP growth of 21/2%–3% and a fourth-quarter unemployment rate of 6%–61/4%. The PCE chain-type price index is expected to grow at an annual rate of about 11/2% during 2002.
Suggested citation: "Monetary Policy," Federal Reserve Bank of Cleveland, Economic Trends, no. 02-03, pp. 04, 03.01.2002.