Federal Reserve Press conference comparison — 14 December 2022 vs 1 February 2023
This Federal Reserve press conference comparison covers 14 December 2022 and 1 February 2023. Overall, the newer document was mixed. The Fed downshifted to a 25bp hike but signaled further tightening and explicitly ruled out rate cuts in 2023, reinforcing a higher-for-longer stance. On inflation, the committee acknowledged disinflation has begun, providing a modest dovish tilt, but labour market tightness and core services inflation keep the bias hawkish.
What changed
Mixed. The Fed downshifted to a 25bp hike but signaled further tightening and explicitly ruled out rate cuts in 2023, reinforcing a higher-for-longer stance. On inflation, the committee acknowledged disinflation has begun, providing a modest dovish tilt, but labour market tightness and core services inflation keep the bias hawkish.
- Inflation — More dovish. The current document acknowledges that 'the disinflationary process has started' and that inflation expectations are well-anchored, a more dovish admission than the prior's neutral 'welcome reduction' which required more evidence.
- Labour Market — Little changed. Both documents describe the labour market as extremely tight, with the prior citing 'out of balance' and the current citing 'extremely tight' and 'very strong', indicating no material shift in assessment.
- Rate Path — More hawkish. The current document explicitly rules out rate cuts in 2023 and reinforces 'higher for longer', a more restrictive forward guidance than the prior's 'restrictive for some time' and terminal rate projection.
- Balance Sheet — Little changed. No balance sheet passages in either document; no shift detected.
Key wording
Today, the FOMC raised our policy interest rate by ½ percentage point.
Restoring price stability will likely require maintaining a restrictive policy stance for some time.
participants continue to see risks to inflation as weighted to the upside.
The inflation data received so far for October and November show a welcome reduction in the monthly pace of price increases. But it will take substantially more evidence to give confidence that inflation is on a sustained downward path.
the labor market continues to be out of balance, with demand substantially exceeding the supply of available workers.
the Committee decided to raise interest rates by 50 basis points today, a step-down from the 75 basis point pace seen over the previous four meetings. Of course, 50 basis points is still a historically large increase, and we still have some ways to go.
Today, the FOMC raised our policy interest rate by 25 basis points.
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.
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.
The labor market remains extremely tight, with the unemployment rate at a 50-year low, job vacancies still very high, and wage growth elevated.
I think it would be premature—it would be very premature to declare victory or to think that we’ve really got this.
Official documents
Background reading
Related
14 December 2022 press conference · 1 February 2023 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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