These forecasts normally only see the light of day five years after the event. Following the inadvertent data leak, the Fed have now decided to open the floodgates and transparently publish all the details.


Those details offer an unexpected peak behind the curtain at the thinking of the staff at the Federal Reserve headquarters on Constitution Avenue, Washington DC. Their growth and inflation outlook is relatively subdued: over the next five years, the unemployment rate is expected to stay above 5%, growth is never expected to get above 2.5%, and core inflation fails to breach 2%.


That implies a very slow normalisation of monetary policy. They have the Fed funds rate increasing to just 1.26%/2.12% by the end of 2016/2017 before settling at 3.34% in the long-run. This is rather different from the public message put out by the policymakers themselves. The forecasts published on a quarterly basis by the Federal Open Market Committee (FOMC) are markedly more upbeat.


How do we square this? Perhaps the most sensible interpretation is that the staff forecasts are closer to the views of the Board of Governors (based in Washington) than the overall FOMC (based around the country). They are another reminder that the policy normalisation, whenever it starts, is set to be a gradual and protracted process.