Fed Raises ’09 GDP View: -0.4%/-0.1%

The Federal Reserve Board’s Open Market Committee this afternoon released the minutes of its November 3rd to 4th meeting, which reveal the Fed raised its expectation for economic growth this year while leaving next year and 2011 forecasts mostly the same.

The Fed now expects 2009 GDP to contract between 0.4% and 0.1%, versus an earlier expectation of a 1.5% to 1% decline. 2010 is pegged at 2.5% to 3.5% expansion, up from 2.1% to 3.3%, while 2011 is now seen to expand 3.4% to 4.5%, a little lighter than the 3.8% to 4.6% growth previously expected. Unemployment will decline “slowly over the next few years,” the Fed’s governors said. Inflation is likely to remain subdued after a 1.1% to 1.2% increase this year, rising as much as 1.6% in 2010, 1.9% in 2011, and 1.9% in 2012. Energy costs will keep inflation generally higher than “core” inflation, the Fed said.

Previously: Q3 GDP Revised to 2.8% As Expected, November 24, 2009.