(CNBC) At the crux of the St. Louis Fed announcement Friday that it is changing its method of forecasting was a dismal acknowledgement — the economy essentially has come as far as it's going to go for the next several years.
The conclusion comes via a wonky slog through issues and terminology ("regime change" anyone?) that only an avid Fed follower could love. But a paper released by James Bullard, who runs the St. Louis Fed, was clear in asserting that present conditions are likely to persist for at least the next 2 ½ years, presenting little need for the central bank to raise rates more than a quarter point.
That means economic growth around 2 percent — though without a recession — limited productivity gains and the associated wage hikes, and muted inflation. On its own, that forecast wouldn't be terribly shocking, if it hadn't come from a leading member of a central bank that only a few weeks ago had been talking up rate hikes and economic growth with a strong sense of certainty.
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