What a difference a couple of months make!
At its regularly scheduled meeting and press conference that followed, the central bankers noted that they think the U.S. economy is recovering from the pandemic and lockdown faster than they expected in June. They moved their estimate for the fall in GDP from down 6.5% in June to down 3.7%.
In addition to a smaller GDP dip, the bankers also lowered their forecast for unemployment to 7.6% by year-end, and down to 4% by 2023.
With inflation expected to remain well below 2% for several years, the Fed expects to let inflation run well above 2% when it finally reaches that level.
This was a marked improvement in the Fed’s view of what lies ahead for the economy and brings into question whether or not the federal government needs to borrow another $650 billion, $1.5 trillion or $2.2 trillion as discussed on Capitol Hill.