In our previous reports, we developed a framework to analyze FOMC and private sector forecast behavior, and our analysis suggested that the FOMC is overly optimistic.1 That is, the FOMC paints a positive picture by forecasting trend-like growth and a “controlled” inflation outlook. Our final report of this series examines whether FOMC and private sector growth and inflation forecasts are consistent with the corresponding fed funds rate forecasts. Our analysis suggests that the FOMC under-forecasted the fed funds rate, while the Blue Chip consensus, a proxy for private sector forecast behavior, over-forecasted the fed ... (full story)