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Money and Financial Markets

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The Monetary Policy Report that the Federal Reserve recently submitted to Congress includes an updated set of economic projections from the Board of Governors and the Federal Reserve Bank presidents, all of whom participate in the deliberations of the Federal Open Market Committee. (These projections are also discussed on page 4.) How accurate have these projections been? For example, looking back over the past two years, only about half the realized (actual) values fell within their projected ranges. It may also come as a surprise that the July projection of a year’s fourth-quarter number (essentially a 6-months-ahead projection) was not always more accurate than the February (or 12-months-ahead) projection. In fact, the ranges given in February 2000 for nominal and real GDP did contain the actual values, whereas the July updates did not.

Suggested citation: "Money and Financial Markets," Federal Reserve Bank of Cleveland, Economic Trends, no. 01-08, pp. 05-07, 08.01.2001.

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