Federal Reserve Press conference comparison — 16 March 2022 vs 27 July 2022
This Federal Reserve press conference comparison covers 16 March 2022 and 27 July 2022. Overall, the newer document was more hawkish. The July 2022 statement confirms aggressive tightening with a 75bp hike and reiterates the need for further increases, but introduces modest dovish elements by signalling a potential slowdown in the pace of hikes and greater data-dependence. This suggests the Fed is nearing the peak of its tightening cycle and may begin to moderate the pace in coming meetings, though inflation remains the dominant concern.
What changed
More hawkish. The July 2022 statement confirms aggressive tightening with a 75bp hike and reiterates the need for further increases, but introduces modest dovish elements by signalling a potential slowdown in the pace of hikes and greater data-dependence. This suggests the Fed is nearing the peak of its tightening cycle and may begin to moderate the pace in coming meetings, though inflation remains the dominant concern.
- Inflation — More hawkish. The current document upgrades inflation language from acknowledging elevated levels to emphasizing persistent upside risks and stronger commitment to bringing inflation down, marking a hawkish shift.
- Labour Market — More hawkish. Labor market characterization shifts from 'extremely tight' to emphasizing risks of persistent tightness contributing to inflation and a higher NAIRU, a hawkish move.
- Rate Path — More dovish. While both documents signal ongoing rate increases, the current document introduces conditional language about eventually slowing the pace and emphasizes data-dependence, a dovish nuance relative to the prior's unqualified hawkish guidance.
- Balance Sheet — Little changed. Balance sheet is not addressed in the current document's key passages, implying no material change in the ongoing runoff plan.
Key wording
Today, in support of these goals, the FOMC raised its policy interest rate by ¼ percentage point.
The Committee anticipates that ongoing increases in the target range for the federal funds rate will be appropriate.
In addition, we expect to begin reducing the size of our balance sheet at a coming meeting.
Inflation remains well above our longer-run goal of 2 percent.
The median projection for the appropriate level of the federal funds rate is 1.9 percent at the end of this year—a full percentage point higher than projected in December.
FOMC participants continue to see risks as weighted to the upside.
today the FOMC raised its policy interest rate by ¾ of a percentage point and anticipates that ongoing increases in the target range for the federal funds rate will be appropriate.
We anticipate that ongoing increases in the target range for the federal funds rate will be appropriate; the pace of those increases will continue to depend on the incoming data and the evolving outlook for the economy.
While another unusually large increase could be appropriate at our next meeting, that is a decision that will depend on the data we get between now and then.
core inflation is a better predictor of inflation going forward.
As the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation.
I think the Committee broadly feels that we need to get policy to at least to a moderately restrictive level. And maybe the best data point for that would be what we wrote down in our SEP at the—at the June meeting. So I think the median [federal funds rate] for the end of this year, the median would've been between 3¼ and 3½ [percent].
Official documents
Background reading
Related
16 March 2022 press conference · 27 July 2022 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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