Federal Reserve Press conference comparison — 4 May 2022 vs 21 September 2022
This Federal Reserve press conference comparison covers 4 May 2022 and 21 September 2022. Overall, the newer document was more hawkish. The September 2022 FOMC statement represents a further hawkish escalation on inflation and rate path, with a 75bp hike and a materially higher projected terminal rate. However, the committee also opens the door to a future slowdown in hikes and acknowledges the need for softer labor market conditions, indicating the pace of tightening may eventually moderate once inflation convincingly turns down.
What changed
More hawkish. The September 2022 FOMC statement represents a further hawkish escalation on inflation and rate path, with a 75bp hike and a materially higher projected terminal rate. However, the committee also opens the door to a future slowdown in hikes and acknowledges the need for softer labor market conditions, indicating the pace of tightening may eventually moderate once inflation convincingly turns down.
- Inflation — More hawkish. Both documents emphasize high inflation and upside risks, but the current adds explicit risk assessment, maintaining a hawkish stance.
- Labour Market — More dovish. The committee shifts from describing a tight labor market to explicitly stating the need for softer conditions, signaling a willingness to tolerate higher unemployment.
- Rate Path — More hawkish. The committee remains firmly hawkish, raising rates by 75bp and projecting a higher terminal rate, while hinting at a future downshift in pace once policy is sufficiently restrictive.
- Balance Sheet — Little changed. Balance sheet policy remains on autopilot, with no imminent active sales of MBS; no directional shift from prior.
Key wording
today the FOMC raised its policy interest rate by ½ percentage point and anticipates that ongoing increases in the target rate for the federal funds rate will be appropriate.
Assuming that economic and financial conditions evolve in line with expectations, there is a broad sense on the Committee that additional 50-basis-point increases should be on the table at the next couple of meetings.
Inflation remains well above our longer-run goal of 2 percent.
Over the 12 months ending in March, total PCE prices rose 6.6 percent; excluding the volatile food and energy categories, core PCE prices rose 5.2 percent.
The labor market has continued to strengthen and is extremely tight.
In March, the unemployment rate hit a post-pandemic, and near-five-decade, low of 3.6 percent.
Today the FOMC raised its policy interest rate by ¾ percentage point, and we anticipate that ongoing increases will be appropriate.
We are moving our policy stance purposefully to a level that will be sufficiently restrictive to return inflation to 2 percent.
Participants continue to see risks to inflation as weighted to the upside.
If you look at core PCE inflation, which is a good measure of where inflation is running now, if you look at it on a 3-, 6-, and 12-month trailing annualized basis, you’ll see that inflation is at 4.8 percent, 4.5 percent, and 4.8 percent.
we think we need to have softer labor market conditions as well.
Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy.
Official documents
Background reading
Related
4 May 2022 press conference · 21 September 2022 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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