Federal Reserve Press conference comparison — 17 March 2021 vs 28 July 2021
This Federal Reserve press conference comparison covers 17 March 2021 and 28 July 2021. Overall, the newer document was more hawkish. The July 2021 statement holds policy steady but shifts rhetoric on inflation towards conditional hawkishness and acknowledges labor market progress, preparing the ground for eventual taper. The next decision will likely involve more detailed taper guidance, but rate hikes remain distant.
What changed
More hawkish. The July 2021 statement holds policy steady but shifts rhetoric on inflation towards conditional hawkishness and acknowledges labor market progress, preparing the ground for eventual taper. The next decision will likely involve more detailed taper guidance, but rate hikes remain distant.
- Inflation — More hawkish. Prior focused on transitory inflation below 2%; Current adds conditional tightening language if inflation persists, signaling increased concern.
- Labour Market — More hawkish. Prior emphasized employment 9.5 million below pre-pandemic; Current adds strong labor market confidence, reducing the urgency for continued accommodation.
- Rate Path — Little changed. Both maintain dovish rate guidance, but Current introduces conditional hawkish elements on inflation and explicit taper discussion, making the stance more mixed.
- Balance Sheet — Little changed. Prior had no explicit balance sheet signals; Current clarifies taper sequencing and internal debate but without a directional change.
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 level—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.
We have not reached substantial further progress yet. So we’re, we’re not there, and we see our ways as having some—we see ourselves as having some ground to cover to get there.
These bottleneck effects have been larger than anticipated, but as these transitory supply effects abate, inflation is expected to drop back toward our longer-run goal.
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 policy.
inflation is running well above our 2 percent objective and has been for a few months and is expected to run up certainly above our objective for a few months before we believe it’ll, it’ll move back down toward our objective.
Official documents
Background reading
Related
17 March 2021 press conference · 28 July 2021 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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