Federal Reserve Press conference comparison — 1 February 2023 vs 14 June 2023
This Federal Reserve press conference comparison covers 1 February 2023 and 14 June 2023. Overall, the newer document was more hawkish. The Fed paused rate hikes but delivered a hawkish message, upgrading growth and inflation projections and signalling further tightening ahead. The next decision is likely a July hike unless data weakens materially.
What changed
More hawkish. The Fed paused rate hikes but delivered a hawkish message, upgrading growth and inflation projections and signalling further tightening ahead. The next decision is likely a July hike unless data weakens materially.
- Inflation — More hawkish. Inflation assessment shifted from acknowledging a welcome reduction to emphasising persistently high core inflation, sticky services, and upside risks, indicating greater concern.
- Labour Market — More hawkish. Labour market remains described as tight with demand exceeding supply and extraordinary resilience, though some loosening is noted; overall hawkish stance maintained.
- Rate Path — More hawkish. Despite a pause in rate hikes, forward guidance shifted to explicitly signal further increases likely this year and rule out cuts, maintaining a hawkish bias.
- Balance Sheet — More dovish. Balance sheet commentary introduced, indicating reserves not scarce and CRE losses manageable, a dovish nuance absent in prior.
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 we decided to leave our policy interest rate unchanged and to continue to reduce our securities holdings.
nearly all Committee participants view it as likely that some further rate increases will be appropriate this year to bring inflation down to 2 percent over time.
labor demand still substantially exceeds the supply of available workers.
inflation pressures continue to run high, and the process of getting inflation back down to 2 percent has a long way to go.
So it seemed to us to make obvious sense to moderate our rate hikes as we got closer to our destination. So the decision to consider not hiking at every meeting and ultimately to hold rates steady at this meeting, I would just say it’s a continuation of, of that process.
I would say about, about July two things: (1) [the] decision hasn’t been made, (2) I do expect that it will be a “live” meeting.
Official documents
Background reading
Related
1 February 2023 press conference · 14 June 2023 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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