Federal Reserve Press conference comparison — 28 July 2021 vs 22 September 2021
This Federal Reserve press conference comparison covers 28 July 2021 and 22 September 2021. Overall, the newer document was more hawkish. The overall tone shifted hawkish on inflation and labour market as the Fed signalled taper readiness, but strongly pushed back against rate hikes by separating taper from liftoff. This suggests the next meeting (November) will likely announce a taper start, while rate liftoff remains distant.
What changed
More hawkish. The overall tone shifted hawkish on inflation and labour market as the Fed signalled taper readiness, but strongly pushed back against rate hikes by separating taper from liftoff. This suggests the next meeting (November) will likely announce a taper start, while rate liftoff remains distant.
- Inflation — More hawkish. Shift from clearly transitory framing to acknowledging inflation criterion for taper is met and opening door to earlier rate liftoff if inflation persists.
- Labour Market — More hawkish. Prior emphasised 'ways to go' with patience; current includes explicit statement that employment test for taper is 'all but met', despite still seeing slack.
- Rate Path — Little changed. Taper signalled as imminent (hawkish relative to prior) but strongly separated from rate liftoff with repeated dovish guidance, resulting in no net directional shift.
- Balance Sheet — Little changed. No balance sheet discussion in prior document; current introduces debt ceiling risks and delays normalization discussion, creating no comparable directional shift.
Key wording
Today the Federal Open Market Committee kept interest rates near zero and maintained our asset purchases.
we are continuing to increase our holdings of Treasury securities by at least $80 billion per month and of agency MBS by at least $40 billion per month until substantial further progress has been made toward our maximum-employment and price-stability goals.
Inflation has increased notably and will likely remain elevated in coming months before moderating. ... 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.
the labor market has a ways to go.
In coming meetings, the Committee will again assess the economy’s progress toward our goals, and the timing of any change in the pace of our asset purchases will depend on the incoming data.
the Federal Open Market Committee kept interest rates near zero and maintained our current pace of asset purchases.
The path of the economy continues to depend on the course of the virus, and risks to the economic outlook remain.
Inflation is elevated and will likely remain so in coming months before moderating.
If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted.
In August, however, job gains slowed markedly, with the slowdown concentrated in sectors most sensitive to the pandemic, including leisure and hospitality.
policy will remain accommodative until we have achieved our maximum-employment and price-stability goals.
Official documents
Background reading
Related
28 July 2021 press conference · 22 September 2021 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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