While this result allows for many interpretations, one possibility is that financial crises, or the deep recessions that typically accompany them, may reduce an economy’s potential growth rate, at least for a time. The accumulating evidence does appear consistent with the financial crisis and the associated recession having reduced the potential growth rate of our economy somewhat during the past few years.
With the June 2015 Summary of Economic Projections (SEP) showing that 15 of 17 FOMC participants judged that appropriate policy would entail an initial increase in the federal funds rate by the end of 2015, markets saw about a 50 percent chance that the first increase would occur in September.