Federal Reserve Press conference comparison — 21 September 2022 vs 1 February 2023
This Federal Reserve press conference comparison covers 21 September 2022 and 1 February 2023. Overall, the newer document was more dovish. The February 2023 statement represents a modest dovish shift: the Fed slowed to a 25bp hike and acknowledged disinflation has begun, while still signalling further tightening and ruling out cuts this year. The next decision will likely be another 25bp hike, with the pace dependent on incoming data.
What changed
More dovish. The February 2023 statement represents a modest dovish shift: the Fed slowed to a 25bp hike and acknowledged disinflation has begun, while still signalling further tightening and ruling out cuts this year. The next decision will likely be another 25bp hike, with the pace dependent on incoming data.
- Inflation — More dovish. Current acknowledges disinflation progress and anchored expectations, a dovish shift from the prior's singular focus on upside risks to inflation.
- Labour Market — More hawkish. Current highlights extremely tight labor market and wage pressures, a hawkish shift from the prior's lack of explicit labour market commentary.
- Rate Path — More dovish. The current document slows the pace to 25bp and acknowledges policy is already restrictive, a dovish shift from the prior's unwavering commitment to large hikes and higher terminal rates.
- Balance Sheet — Little changed. No balance sheet commentary in either document, no shift.
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 25 basis points.
We continue to anticipate that ongoing increases will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.
And it is our judgment that we’re not yet at a sufficiently restrictive policy stance, which is why we say that we expect ongoing hikes will be appropriate.
If we come to the view that we need to write down to, you know, to move rates up beyond what we said in December, we would certainly do that.
I think it would be premature—it would be very premature to declare victory or to think that we’ve really got this.
The inflation data received over the past three months show a welcome reduction in the monthly pace of increases. And, while recent developments are encouraging, we will need substantially more evidence to be confident that inflation is on a sustained downward path.
Official documents
Background reading
Related
21 September 2022 press conference · 1 February 2023 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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