Federal Reserve Press conference comparison — 21 September 2022 vs 2 November 2022
This Federal Reserve press conference comparison covers 21 September 2022 and 2 November 2022. Overall, the newer document was more hawkish. The November statement reinforces the hawkish stance from September, with intensification across inflation and labour market rhetoric, and a more explicit commitment to a higher terminal rate and longer duration. The next decision is likely another 75bp hike, with the door open for a downshift in pace but no pivot until inflation convincingly falls.
What changed
More hawkish. The November statement reinforces the hawkish stance from September, with intensification across inflation and labour market rhetoric, and a more explicit commitment to a higher terminal rate and longer duration. The next decision is likely another 75bp hike, with the door open for a downshift in pace but no pivot until inflation convincingly falls.
- Inflation — More hawkish. Inflation rhetoric intensified from acknowledging recession risk to explicitly highlighting rising short-term expectations, persistent core inflation, and demand-driven pressures.
- Labour Market — More hawkish. Labour market characterization shifted from absent to explicitly hawkish, citing 50-year low unemployment, elevated wage growth, and no signs of softening.
- Rate Path — More hawkish. Rate path guidance shifted from hints of eventual slowdown to explicitly downplaying pace moderation and rejecting a pause, with a higher terminal rate and longer duration emphasized.
- Balance Sheet — Little changed. No balance sheet passages in either document; no change.
Key wording
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.
Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy.
As shown in the SEP, 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 and declines to 2.9 percent by the end of 2025, still above the median estimate of its longer-run value.
Participants continue to see risks to inflation as weighted to the upside.
Reducing inflation is likely to require a sustained period of below-trend growth, and there will very likely be some softening of labor market conditions.
Today, the FOMC raised our policy interest rate by 75 basis points. And we continue to anticipate that ongoing increases will be appropriate.
Restoring price stability will likely require maintaining a restrictive stance of policy for some time.
At some point—as I’ve said in the last two press conferences—it will become appropriate to slow the pace of increases as we approach the level of interest rates that will be sufficiently restrictive to bring inflation down to our 2 percent goal. Even so, we still have some ways to go, and incoming data since our last meeting suggest that the ultimate level of interest rates will be higher than previously expected.
We need to bring our policy stance down to a level that's sufficiently restrictive to bring inflation down to our 2 percent objective over the medium term.
incoming data between the meetings, both a strong labor market report but particularly the CPI report, do suggest to me that we may ultimately move to higher levels than we thought at the time of the September meeting.
Shorter-term inflation expectations moved up between the last meeting and this meeting, and we don’t think those are as indicative, but they may be important in the wage-setting process. There’s a school of thought that believes that. So that’s very concerning.
Official documents
Background reading
Related
21 September 2022 press conference · 2 November 2022 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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