by Calculated Risk on 2/16/2011 02:20:00 PM

Here are the minutes for the January FOMC meeting.

Below are the forecasts. GDP was revised up, the unemployment rate revised down (this was before the January unemployment rate was announced), inflation is still forecast to be below target.

A few excerpts:

While participants viewed the downside risks to their forecasts of economic activity over the projection period as having diminished, their assessment of the most likely outcomes for economic activity and inflation over the projection period was not greatly changed. Most participants raised their forecast of real GDP growth in 2011 somewhat and continued to anticipate stronger growth this year than in 2010, with a further gradual acceleration during 2012 and 2013. The unemployment rate was still projected to decline gradually over the forecast period but to remain elevated. Total inflation was still expected to remain subdued, and core inflation was projected to trend up slowly over the next few years as economic activity picks up but inflation expectations remain well anchored.

And on the risks:

Participants generally saw the risks to their outlook for economic growth and employment as having become broadly balanced, but they continued to see significant risks to both sides of the outlook. On the downside, participants remained worried about the possible effects of spillovers from the banking and fiscal strains in peripheral Europe, the ongoing fiscal adjustments by U.S. state and local governments, and the continued weakness in the housing market. On the upside, the recent strength in household spending raised the possibility that domestic final demand could snap back more rapidly than anticipated. If so, a considerably stronger recovery could take hold, more in line with the sorts of recoveries seen following deep economic recessions in the past.

And on the pace of QE2:

A few members noted that additional data pointing to a sufficiently strong recovery could make it appropriate to consider reducing the pace or overall size of the purchase program. However, others pointed out that it was unlikely that the outlook would change by enough to substantiate any adjustments to the program before its completion.

Just a little more positive overall.

January 2011 Economic projections of Federal Reserve Governors and Reserve Bank presidents
	2011	2012	2013
Change in Real GDP	3.4 to 3.9	3.5 to 4.4	3.7 to 4.6
Previous Projection (Nov 2010)	3.0 to 3.6	3.6 to 4.5	3.5 to 4.6
Unemployment Rate	8.8 to 9.0	7.6 to 8.1	6.8 to 7.2
Previous Projection (Nov 2010)	8.9 to 9.1	7.7 to 8.2	6.9 to 7.4
PCE Inflaton	1.3 to 1.7	1.0 to 1.9	1.2 to 2.0
Previous Projection (Nov 2010)	1.1 to 1.7	1.1 to 1.8	1.2 to 2.0
Core PCE Inflation	1.0 to 1.3	1.0 to 1.5	1.2 to 2.0
Previous Projection (Nov 2010)	0.9 to 1.6	1.0 to 1.6	1.1 to 2.0

FOMC definitions:
¹ Projections of change in real GDP and in inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.
² Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.