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Working Paper
The Fed's Response to Economic News Explains the “Fed Information Effect”
High-frequency changes in interest rates around FOMC announcements are a standard method of measuring monetary policy shocks. However, some recent studies have documented puzzling effects of these shocks on private-sector forecasts of GDP, unemployment, or inflation that are opposite in sign to what standard macroeconomic models would predict. This evidence has been viewed as supportive of a “Fed information effect” channel of monetary policy, whereby an FOMC tightening (easing) communicates that the economy is stronger (weaker) than the public had expected. We show that these empirical ...
Revisiting Professional Forecasters’ Past Performance and the Outlook for 2026
So far, the 2025 forecasts have turned out to be rather accurate. For 2026, professional forecasters expect 1.9% GDP growth and a 2.9% increase in the consumer price index.