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NEW YORK (Reuters) - Federal Reserve policymakers' forecasts for U.S. economic growth next year are way above the market consensus and the strongest since 1984, suggesting they are confident recent stimulus will light a fire under the moribund recovery.
But economists caution the central bank has been over-optimistic in its forecasts throughout the entire downturn and pallid recovery, and as yet there are scant signs of the long-anticipated return to solid growth.
The Fed's central tendency forecast for 2004, compiled from estimates by the members of the policy-setting Federal Open Market Committee, put growth at 3.75 to 4.75 percent.
The mid-point of that range of 4.25 percent is well above the median 3.7 percent forecast of 29 private-sector economists polled by Reuters over the past week.
Reader Hobson suggests those who doubt have failed to grasp that Alan Greenspan is prepared to reduce interest rates, if necessary to stimulate the economy, to a minus percentage, wherein depositors will have to pay to keep their money anywhere but under a mattress.