Our forecasts suggest that GDP growth will exceed the growth rate of potential output and be driven by continued accommodative monetary policy, population growth, high terms of trade and, in the outer period, by the budgetary stimulus announced in the 2017 Budget. A positive output gap is forecast with inflation gradually approaching the mid-point of the target band.
Consequently, in my press conference following the June FOMC meeting, I presented a framework linking the program more explicitly to the evolution of the FOMC’s economic outlook. In particular, I noted the Committee’s expectation at the time that improvements in the job market would continue, supported by a moderate pickup in growth that would support those gains.