Federal Reserve Press conference comparison — 17 March 2021 vs 16 June 2021
This Federal Reserve press conference comparison covers 17 March 2021 and 16 June 2021. Overall, the newer document was more hawkish. The June 2021 FOMC meeting delivers a hawkish tilt relative to March, with the SEP projecting earlier rate liftoff, a new conditional hawkishness on inflation, and a shift toward discussing tapering. Labour market language remains patient but acknowledges future tightening conditions, signaling the Fed is laying groundwork for eventual policy normalization while maintaining near-term accommodation.
What changed
More hawkish. The June 2021 FOMC meeting delivers a hawkish tilt relative to March, with the SEP projecting earlier rate liftoff, a new conditional hawkishness on inflation, and a shift toward discussing tapering. Labour market language remains patient but acknowledges future tightening conditions, signaling the Fed is laying groundwork for eventual policy normalization while maintaining near-term accommodation.
- Inflation — More hawkish. Current document introduces explicit hawkish risks and willingness to act if inflation persists, departing from prior uniform transitory narrative.
- Labour Market — More dovish. Labour market characterisation remains dovish with emphasis on distance from maximum employment, though new forward-looking hawkish element on 2023 resource utilization is introduced.
- Rate Path — More hawkish. Rate path stance shifted hawkishly as SEP now projects liftoff in 2023 and participants see forward guidance conditions met sooner, while still reiterating dependence on outcomes.
- Balance Sheet — More hawkish. Balance sheet stance turned hawkish as current document indicates the Committee is now prepared to consider announcing a tapering plan, a clear departure from prior dovish QE continuation language.
Key wording
Today the FOMC kept interest rates near zero and maintained our sizable asset purchases.
We expect to maintain an accommodative stance of monetary policy until these employment and inflation outcomes are achieved.
With regard to interest rates, we continue to expect it will be appropriate to maintain the current 0 to ¼ percent target range for the federal funds rate until labor market conditions have reached levels consistent with the Committee’s assessment of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.
I would note that a transitory rise in inflation above 2 percent, as seems likely to occur this year, would not meet this standard.
Overall inflation remains below our 2 percent longer-run objective.
However, these one-time increases in prices are likely to have only transient effects on inflation.
Today the Federal Open Market Committee kept interest rates near zero and maintained our asset purchases.
We continue to expect that it will be appropriate to maintain the current 0 to ¼ percent target range for the federal funds rate until labor market conditions have reached levels consistent with the Committee’s assessment of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.
the median projection for the appropriate level of the federal funds rate now lies above the effective lower bound in 2023.
If we saw signs that the path of inflation or longer-term inflation expectations were moving materially and persistently beyond levels consistent with our goal, we’d be prepared to adjust the stance of monetary policy.
Inflation has come in above expectations over the last few months. But if you look behind the headline numbers, you’ll see that the incoming data are, are consistent with the view that prices—that prices that are driving that higher inflation are from categories that are being directly affected by the recovery from the pandemic and the reopening of the economy.
If you look at the forecast for 2021 and—sorry, 2022 and 2023 among my colleagues on the, on the Federal Open Market Committee, you will see that people do expect inflation to move down meaningfully toward our goal. And I think the full range of, of, of inflation projections for 2023 falls between 2 and 2.3 percent, which is consistent with our—with our goals.
Official documents
Background reading
Related
17 March 2021 press conference · 16 June 2021 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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