When Might the Federal Funds Rate Lift Off? Computing the Probabilities of Crossing Unemployment and Inflation Thresholds

Edward Knotek and Saeed Zaman

Economic Commentary, 2013, issue Dec

Abstract: The Federal Open Market Committee has been providing guidance to help markets anticipate when it will begin raising the federal funds rate target. The most recent guidance suggests that the target will not change at least until after an unemployment or infl ation threshold is breached. We use a forecasting model to estimate when these thresholds are likely to be breached. We also consider how an infl ation fl oor would affect the timing of liftoff.

Date: 2013
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