Federal Reserve Press conference comparison — 2 November 2022 vs 22 March 2023

This Federal Reserve press conference comparison covers 2 November 2022 and 22 March 2023. Overall, the newer document was more dovish. The Fed delivered a 25bp hike but significantly softened forward guidance, replacing 'ongoing' with 'some additional' and introducing credit conditions as a substitute for rate hikes. The next decision is heavily data-dependent with a bias toward a pause, as the committee assesses the impact of banking stress on the economy.

What changed

More dovish. The Fed delivered a 25bp hike but significantly softened forward guidance, replacing 'ongoing' with 'some additional' and introducing credit conditions as a substitute for rate hikes. The next decision is heavily data-dependent with a bias toward a pause, as the committee assesses the impact of banking stress on the economy.

Inflation — Little changed. Inflation remains persistently above target with hawkish language in both documents, but the current emphasis on 'bumpy' path and commitment to 2% does not represent a material shift from prior strong inflation concern.
Labour Market — More dovish. Labor market language softens from 'extremely tight' with wage pressures to 'tight' but acknowledging 'some softening in labor market conditions' will be needed, indicating greater tolerance for weaker employment.
Rate Path — More dovish. Guidance shifts from 'ongoing increases will be appropriate' to 'some additional policy firming may be appropriate,' with several passages citing credit tightening as a substitute for rate hikes and pushing back on rate cuts only conditionally, signaling increased optionality and a potential pause.
Balance Sheet — Little changed. New topic in current document: emergency lending for banking stress is explicitly decoupled from monetary policy stance, with no prior baseline to compare.

Key wording

2 November 2022

Today, the FOMC raised our policy interest rate by 75 basis points. And we continue to anticipate that ongoing increases will be appropriate.
rate path: Confirms another 75bp hike and signals more hikes to come.

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.
rate path: Implies terminal rate above prior estimates, shifting rate expectations higher.

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.
rate path: Opens the door to a downshift in pace, but conditionally.

The historical record cautions strongly against prematurely loosening policy. We will stay the course until the job is done.
rate path: Risk management leans against cutting rates too soon; commitment to restrictive stance.

Inflation remains well above our longer-run goal of 2 percent. ... And the recent inflation data again have come in higher than expected.
inflation: Inflation is persistent and surprising to the upside, reinforcing need for tighter policy.

Despite the slowdown in growth, the labor market remains extremely tight, with the unemployment rate at a 50-year low, job vacancies still very high, and wage growth elevated.
labour market: Labor market strength supports continued tightening to cool demand and wage pressures.

22 March 2023

At today’s meeting, the Committee raised the target range for the federal funds rate by ¼ percentage point, bringing the target range to 4¾ to 5 percent.
rate path: Confirms 25bp hike despite banking stress.

As a result, we no longer state that we anticipate that ongoing rate increases will be appropriate to quell inflation; instead, we now anticipate that some additional policy firming may be appropriate.
rate path: Softens guidance from 'will' to 'may', signaling optionality to pause.

We also assess, as I mentioned, that the events of the last two weeks are likely to result in some tightening credit conditions for households and businesses and thereby weigh on demand, on the labor market, and on inflation. Such a tightening in financial conditions would work in the same direction as rate tightening. In principle, as a matter of fact, you can think of it as being the equivalent of a rate hike or perhaps more than that; of course, it’s not possible to make that assessment today with any precision whatsoever.
rate path: Credit tightening acts like rate hikes, reducing need for further policy tightening.

So our decision was to move ahead with the 25 basis point hike and to change our guidance, as I mentioned, from ongoing hikes to some, some additional hikes maybe—some policy firming may be appropriate.
rate path: 25bp hike delivered but guidance softened from 'ongoing' to 'some additional', signaling uncertainty.

Inflation remains well above our longer-run goal of 2 percent. The process of getting inflation back down to 2 percent has a long way to go and is likely to be bumpy.
inflation: Inflation persistence keeps Fed vigilant despite banking issues.

Yet the labor market remains extremely tight.
labour market: Tight labor market adds to inflation pressure, supports further tightening.

Official documents

Background reading

2 November 2022 press conference · 22 March 2023 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology