Federal Reserve Press conference comparison — 15 June 2022 vs 21 September 2022
This Federal Reserve press conference comparison covers 15 June 2022 and 21 September 2022. Overall, the newer document was more hawkish. The current document maintains an unambiguously hawkish stance across inflation, labor, and rate path, with added emphasis on persistence of inflation, willingness to accept labor market softening, and commitment to holding rates restrictive for an extended period. The next decision likely remains a 75bp hike, with focus on further tightening to achieve a sufficiently restrictive stance.
What changed
More hawkish. The current document maintains an unambiguously hawkish stance across inflation, labor, and rate path, with added emphasis on persistence of inflation, willingness to accept labor market softening, and commitment to holding rates restrictive for an extended period. The next decision likely remains a 75bp hike, with focus on further tightening to achieve a sufficiently restrictive stance.
- Inflation — More hawkish. Inflation characterization remains hawkish with added emphasis on persistence of shelter inflation and elevated core measures, no sign of slowing.
- Labour Market — More hawkish. Prior stressed tightness fueling inflation; current explicitly acknowledges need for softer labor market conditions, reinforcing hawkish willingness to accept weakening.
- Rate Path — More hawkish. Both documents strongly hawkish, but current adds explicit guidance on holding at restrictive levels for some time and sets high bar for cuts, a more aggressive stance on terminal rate and duration.
- Balance Sheet — Little changed. No balance sheet passage in prior; current indicates no imminent MBS sales, neutral with no directional shift.
Key wording
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.
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.
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.
Participants continue to see risks to inflation as weighted to the upside.
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.
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.
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.
Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy.
we think we need to have softer labor market conditions as well.
The median projection for the appropriate level of the federal funds rate is 4.4 percent at the end of this year, 1 percentage point higher than projected in June. The median projection rises to 4.6 percent at the end of next year.
Official documents
Background reading
Related
15 June 2022 press conference · 21 September 2022 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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