Federal Reserve Press conference comparison — 22 September 2021 vs 3 November 2021

This Federal Reserve press conference comparison covers 22 September 2021 and 3 November 2021. Overall, the newer document was more hawkish. Overall, the Fed moved hawkishly on inflation and balance sheet by acknowledging persistent inflation and starting tapering, but dovishly on rate path by pushing back against near-term rate hikes. The next decision will likely continue tapering as planned while keeping rates on hold until labor market conditions improve further.

What changed

More hawkish. Overall, the Fed moved hawkishly on inflation and balance sheet by acknowledging persistent inflation and starting tapering, but dovishly on rate path by pushing back against near-term rate hikes. The next decision will likely continue tapering as planned while keeping rates on hold until labor market conditions improve further.

Inflation — More hawkish. The prior document described inflation as elevated but expected to moderate; the current document sharply upgrades inflation risks, drops 'transitory' framing, and explicitly states inflation is inconsistent with price stability.
Labour Market — Little changed. Both documents highlight labor market slack and uncertainty; the current document adds nuance about fear of COVID and caretaking, but the overall dovish assessment is unchanged.
Rate Path — More dovish. The prior document signaled tapering and a median 2022 rate hike; the current document explicitly decouples tapering from rate hikes and repeatedly states it is premature to raise rates, a clear dovish shift.
Balance Sheet — More hawkish. The prior document had no balance sheet action; the current document announces the start of tapering, with a specified pace and faster than expected, marking a hawkish shift.

Key wording

22 September 2021

Today, the Federal Open Market Committee kept interest rates near zero and maintained our current pace of asset purchases.
rate path: No policy change, as widely expected.

If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted.
rate path: Clear signal that tapering is imminent, subject to continued progress.

participants generally view that, so long as the recovery remains on track, a gradual tapering process that concludes around the middle of next year is likely to be appropriate.
rate path: Provides a concrete timeline for tapering completion: mid-2022.

Inflation is elevated and will likely remain so in coming months before moderating.
inflation: Acknowledges high inflation but expects it to be transitory.

bottlenecks, hiring difficulties, and other constraints could again prove to be greater and longer lasting than anticipated, posing upside risks to inflation.
rate path: Explicitly flags upside risks to inflation from supply constraints.

The unemployment rate was 5.2 percent in August, and this figure understates the shortfall in employment, particularly as participation in the labor market has not moved up from the low rates that have prevailed for most of the past year.
labour market: Highlights labor market slack beyond the headline unemployment rate.

3 November 2021

Our decision today to begin tapering our asset purchases does not imply any direct signal regarding our interest rate policy. We continue to articulate a different and more stringent test for the economic conditions that would need to be met before raising the federal funds rate.
rate path: Explicitly decouples tapering from rate hikes; rates to stay low longer.

It is time to taper, we think, because the economy has achieved substantial further progress toward our goals, measured from last December. We don’t think it’s time yet to raise interest rates.
rate path: Confirms taper start but pushes back on market rate hike expectations.

The time for lifting rates and beginning to remove accommodation will depend on the path of the economy.
rate path: Keeps optionality; rate hikes are data-dependent.

But what it really boils down to is something that’s common sense. And that is risk management. We have to be aware of the risks that we’re—particularly now the risk of significantly higher inflation.
inflation: Highlights inflation risk, signaling vigilance.

We don’t think it’s a good time to raise interest rates, though, because we want to see the labor market heal further.
rate path: Explicitly conditions rate hikes on labor market healing, pushing back on near-term hikes.

Right now, people are staying out of the labor market because of caretaking [and] because of fear of COVID to a significant extent. So I think there’s room for a whole lot of humility here, as we try to think about what maximum employment would be.
labour market: High uncertainty about max employment suggests Fed will be patient before raising rates.

Official documents

Background reading

22 September 2021 press conference · 3 November 2021 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology