Indeed, growth forecasts are actually lower than when they began the latest round of QE, despite the FOMC stating things are better than last Fall.
To be fair, this time last year was clouded by much greater downside risks of the EU meltdown and fiscal contraction, but its telling that even though the downside risks from these events have lessened significantly, the growth outlook is still very weak.
The Fed also appears to recognise that the decision to stay the course on QE was to ensure that conditions did not tighten further. The statement makes clear that they want to make sure momentum can be sustained even though interest rates have risen sharply. As posted here, the sharp drop in home sales probably created some concern and will be a key variable to watch in the coming months.
It iss not clear that growth will be any better to drive a decision to taper in late October or December. Most tracking estimates for growth in Q3 are pretty weak, with downside risks presented by a likely fight in Congress over raising the debt limit. So it may not be any clearer for months whether they should take that first step.
Also of interest was the projections of the Fed Funds rate by the FOMC members, which now include an expectation for 2016. Here the average expectation for the Fed Funds rate is ~2%, which is quite some way from the "long run" expectation of ~4%.
Over the last year we have generally seen the expected Fed Funds rate revised lower, although 2015 still remains when just about all members expect the beginning of rate normalisation. But the chart above suggests this is likely to be a slower process than some might be envisioning.
