Federal Reserve Press conference comparison — 22 September 2021 vs 15 December 2021
This Federal Reserve press conference comparison covers 22 September 2021 and 15 December 2021. Overall, the newer document was more hawkish. The December 2021 FOMC meeting represents a decisive hawkish shift from September: the Fed accelerated tapering, upgraded its inflation assessment to persistent, and signalled that rate hikes will come sooner after taper ends. This sets the stage for a potential rate hike as early as March 2022, contingent on continued economic progress.
What changed
More hawkish. The December 2021 FOMC meeting represents a decisive hawkish shift from September: the Fed accelerated tapering, upgraded its inflation assessment to persistent, and signalled that rate hikes will come sooner after taper ends. This sets the stage for a potential rate hike as early as March 2022, contingent on continued economic progress.
- Inflation — More hawkish. Shifted from viewing inflation as elevated but transitory to persistent and well above target, with upside risks from wage pressures.
- Labour Market — More hawkish. Shifted from highlighting slack and understated unemployment to emphasizing rapid progress toward maximum employment and extreme tightness.
- Rate Path — More hawkish. Shifted from a neutral stance with mixed signals to clearly signalling earlier rate hikes, with a shorter lag between taper end and liftoff.
- Balance Sheet — More hawkish. Introduced explicit hawkish signals: doubling the pace of taper and indicating earlier balance sheet runoff.
Key wording
Today, the Federal Open Market Committee kept interest rates near zero and maintained our current pace of asset purchases.
If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted.
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.
Inflation is elevated and will likely remain so in coming months before moderating.
bottlenecks, hiring difficulties, and other constraints could again prove to be greater and longer lasting than anticipated, posing upside risks to inflation.
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.
The rise in COVID cases in recent weeks, along with the emergence of the Omicron variant, pose[s] risks to the outlook.
the Committee expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment.
Since we’re two meetings away from completing the taper, assuming things go as, as expected, I think if we wanted to lift off before then, then, then what we—you would stop the taper potentially sooner. But it’s not something I expect to happen.
overall inflation is running well above our 2 percent longer-run goal and will likely continue to do so well into next year.
I don’t—I don’t foresee that there would be that kind of very extended wait at this time. The economy is so much stronger. I was here at the Fed when we lifted off the last time. And the economy is so much stronger now, so much closer to full employment. Inflation is running well above target, and growth is well above potential. There wouldn’t be the need for that kind of long delay.
Amid improving labor market conditions and very strong demand for workers, the economy has been making rapid progress toward maximum employment.
Official documents
Background reading
Related
22 September 2021 press conference · 15 December 2021 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
The Cadence Brief
The one number that moved central bank pricing — delivered each weekday morning.