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 The rate forecast was included with a series of bearish projections
on U.S. economic growth and inflation that were presented to
policymakers at their June 16-17 meeting.
The disclosure of the sensitive information is the latest blow to
the Fed's reputation for secrecy around policy deliberations.
Later on Friday evening, the Fed said the inadvertently released
document was not the correct document. It provided a new table
showing slightly lower outlooks for gross domestic product and
inflation in 2015, as well as other revisions.
Federal prosecutors are currently probing an alleged leak at the Fed
of market-sensitive information to a private financial newsletter in
2012.
"It regrettably appears once again that proper internal controls are
not in place to safeguard confidential Federal Reserve information,"
said Representative Jeb Hensarling of Texas, a Republican who chairs
the House Financial Services Committee and is pressing Fed Chair
Janet Yellen for documents regarding the 2012 leak.
The Fed said in a statement that the forecasts were "inadvertently"
included in a computer file posted to its website on June 29.
Fed officials said the disclosure was due to procedural errors at a
staff level and that the mistake was discovered on Tuesday this
week. The matter has been referred to the Fed's inspector general.
The forecasts do not represent the views of the central bankers who
set interest rate policy. Those policymakers, many based outside of
Washington in regional Fed branches, create their own forecasts, the
most recent of which were released on June 17.
But Board of Governors' staff views are sensitive and influential
enough that the Fed normally releases them about five years after
they were made.
ONE HIKE IN 2015
In the projections prepared in June, and in the revised table
released on Friday, the staff expected policymakers would raise
their benchmark interest rate, known as the Fed funds rate, enough
for it to average 0.35 percent in the fourth quarter of 2015.
That implies one quarter-point hike this year, as the Fed funds rate
is currently hovering around 0.13 percent. <USONFFE=>
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Analysts at JPMorgan and Barclays said this suggested the staff
expected a rate hike before a scheduled Dec. 15-16 policy meeting.
The Fed also has policy meetings scheduled for July 28-29, Sept.
16-17, and Oct. 27-28.
All but two of the Fed's 17 policymakers said last month they think
rates should rise in 2015. They were divided between whether it
would be best to raise rates once or twice this year.
The staff views were less optimistic about the economy than several
key policymaker forecasts.
In the revised projections, which stretched from 2015 to 2020, the
staff did not expect inflation to ever reach the Fed's 2.0 percent
target. By the fourth quarter of 2020, they saw the PCE (personal
consumption expenditure) inflation index rising 1.97 percent from a
year earlier.
The Fed's staff also took a dimmer view of long-run economic growth,
expecting gross domestic product to expand 1.73 percent in the year
through the fourth quarter of 2020. The views of Fed policymakers
for long-term growth range from 1.8 percent to 2.5 percent.
The Fed goes to great lengths to manage the release of sensitive
information. Policymakers and staff avoid making public comments
just ahead of policy meetings, and the Fed makes journalists turn in
their phones before letting them into a locked room to see a policy
statement and prepare news stories just before the interest rate
decision is published electronically.
A Department of Justice probe is looking into an analyst note in
2012 that included details on a policy meeting before that
information was made public.
"It is baffling that these leaks continue to occur," said
Congressman Randy Neugebauer, a Texas Republican who chairs the
House subcommittee on financial institutions and consumer credit.
(Reporting by Jason Lange and Howard Schneider; Additional reporting
by Douwe Miedema; Editing by Clive McKeef and Ken Wills)
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