Federal Reserve Press conference comparison — 15 June 2022 vs 27 July 2022

This Federal Reserve press conference comparison covers 15 June 2022 and 27 July 2022. Overall, the newer document was more dovish. The July 2022 statement delivered another 75bp hike but introduced a dovish tilt by signalling that slowing the pace of rate increases will likely become appropriate, marking a shift from June's more aggressive posture. Inflation and labour market assessments remain broadly hawkish but are tempered by increased data dependence and recognition of a potential soft landing path, keeping the door open for a 50bp hike in September.

What changed

More dovish. The July 2022 statement delivered another 75bp hike but introduced a dovish tilt by signalling that slowing the pace of rate increases will likely become appropriate, marking a shift from June's more aggressive posture. Inflation and labour market assessments remain broadly hawkish but are tempered by increased data dependence and recognition of a potential soft landing path, keeping the door open for a 50bp hike in September.

Inflation — Little changed. Inflation language remains hawkish with continued emphasis on need to bring inflation down, but the prior explicit upside risk framing is replaced by more conditional language, resulting in no net directional shift.
Labour Market — More dovish. While labour market is still described as 'extremely tight', the current document introduces a potential soft landing path and counters recession fears, a modest softening from June's purely hawkish characterisation.
Rate Path — More dovish. The July statement retains the 75bp hike and ongoing increases but adds explicit guidance that slowing the pace will likely become appropriate, a clear dovish shift from June's aggressive tightening bias.
Balance Sheet — Little changed. No balance sheet language in key passages; no change detected.

Key wording

15 June 2022

today the Federal Open Market Committee raised its policy interest rate by ¾ percentage point and anticipates that ongoing increases in that rate will be appropriate.
rate path: 75bp hike confirms hawkish pivot from prior guidance of 50bp.

Clearly, today’s 75 basis point increase is an unusually large one, and I do not expect moves of this size to be common. From the perspective of today, either a 50 basis point or a 75 basis point increase seems most likely at our next meeting.
rate path: Leaves door open for another 75bp, keeping markets pricing more tightening.

Inflation remains well above our longer-run goal of 2 percent. Over the 12 months ending in April, total PCE prices rose 6.3 percent; excluding the volatile food and energy categories, core prices rose 4.9 percent. In May, the 12-month change in the consumer price index came in above expectations at 8.6 percent, and the change in the core CPI was 6 percent.
inflation: CPI data surprised to upside, reaffirming need for aggressive action.

Participants continue to see risks to inflation as weighted to the upside.
rate path: Inflation risks skewed higher, supporting further rate hikes.

The labor market has remained extremely tight, with the unemployment rate near a 50-year low, job vacancies at historical highs, and wage growth elevated.
labour market: Tight labour market adds to inflation pressure, justifying policy tightening.

We anticipate that ongoing rate increases will be appropriate; the pace of those changes will continue to depend on the incoming data and the evolving outlook for the economy.
rate path: Data-dependent pace, but reaffirms hiking cycle continues.

27 July 2022

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.
rate path: Confirms 75bp hike and signals further rate increases, in line with expectations.

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.
rate path: Reiterates need for more hikes with data-dependent pace, keeping optionality for further tightening.

core inflation is a better predictor of inflation going forward.
inflation: Indicates focus on core inflation as signal for policy.

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.
rate path: Leaves door open for another 75bp hike, but ties it to incoming data, signaling flexibility.

the labor market has remained extremely tight, with the unemployment rate near a 50-year low, job vacancies near historical highs, and wage growth elevated.
labour market: Emphasizes persistent tightness, contributing to inflation pressure and justifying aggressive tightening.

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.
rate path: First hint of eventual downshift in hike pace, key for market pricing of terminal rate.

Official documents

Background reading

15 June 2022 press conference · 27 July 2022 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology