Federal Reserve Press conference comparison — 1 February 2023 vs 3 May 2023
This Federal Reserve press conference comparison covers 1 February 2023 and 3 May 2023. Overall, the newer document was more dovish. The May 2023 statement marks a dovish pivot: the FOMC raised rates 25bp as expected but softened forward guidance by removing the 'anticipates' language and signaling the hiking cycle is nearing its end. The next meeting is live for a pause, with further action dependent on incoming data.
What changed
More dovish. The May 2023 statement marks a dovish pivot: the FOMC raised rates 25bp as expected but softened forward guidance by removing the 'anticipates' language and signaling the hiking cycle is nearing its end. The next meeting is live for a pause, with further action dependent on incoming data.
- Inflation — Little changed. Both documents acknowledge inflation has moderated but remains high and requires more progress; the overall stance is unchanged.
- Labour Market — More dovish. The labour market description softened from 'extremely tight' with multiple indicators to 'very tight' and added a comment that a recession is less likely, suggesting reduced urgency for tightening.
- Rate Path — More dovish. Forward guidance shifted from 'ongoing increases appropriate' to a data-dependent approach that opened the door to a pause, removed the 'anticipates' language, and signalled the cycle is near its end.
- Balance Sheet — More dovish. The resolution of First Republic was cited as reducing systemic risk, and risks are now more balanced, lowering the financial stability impetus for hawkish policy.
Key wording
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.
The labor market remains extremely tight, with the unemployment rate at a 50-year low, job vacancies still very high, and wage growth elevated.
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 historical record cautions strongly against prematurely loosening policy. We will stay the course, until the job is done.
In light of the cumulative tightening of monetary policy and the lags with which monetary policy affects economic activity and inflation, the Committee decided to raise interest rates by 25 basis points today, continuing the step-down from last year’s rapid pace of increases. Shifting to a slower pace will better allow the Committee to assess the economy’s progress toward our goals as we determine the extent of future increases that will be required to attain a sufficiently restrictive stance.
Today, the FOMC raised its policy interest rate by ¼ percentage point.
Looking ahead, we will take a data-dependent approach in determining the extent to which additional policy firming may be appropriate.
The labor market remains very tight.
Inflation has moderated somewhat since the middle of last year. Nonetheless, inflation pressures continue to run high, and the process of getting inflation back down to 2 percent has a long way to go.
We are prepared to do more if greater monetary policy restraint is warranted.
today our decision was to raise the federal funds rate by 25 basis points.
Official documents
Background reading
Related
1 February 2023 press conference · 3 May 2023 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
The Cadence Brief
The one number that moved central bank pricing — delivered each weekday morning.