Fed Expects Slower Inflation In 2015, But Little Long-term Change

The Federal Reserve on Wednesday predicted inflationary pressures will diminish further in 2015 because of falling oil prices, but the central bank sees little change in its long-term inflation outlook. The Fed predicted overall inflation as measured by the PCE index will have a core tendency of 1% to 1.6% next year instead of 1.6% to 1.9%. Yet core inflation, which strips out energy and food, is barely expected to show any change. The Fed estimates the central tendency of core inflation to be 1.5% to 1.8% in 2015 and 1.7% to 2% in 2016. The bank also made no change to its forecast for growth of 2.6% to 3% in 2015.