Federal Reserve Press conference comparison — 22 March 2023 vs 3 May 2023
This Federal Reserve press conference comparison covers 22 March 2023 and 3 May 2023. Overall, the newer document was more dovish. The May 2023 FOMC statement and press conference reveal a dovish pivot across all topics: inflation is seen as moderating, labour market tightness is no longer the sole driver, and the rate path is adjusted to emphasize a nearing end to hikes with a potential pause. This signals that the next decision is likely a hold, with further tightening only if data surprises to the upside.
What changed
More dovish. The May 2023 FOMC statement and press conference reveal a dovish pivot across all topics: inflation is seen as moderating, labour market tightness is no longer the sole driver, and the rate path is adjusted to emphasize a nearing end to hikes with a potential pause. This signals that the next decision is likely a hold, with further tightening only if data surprises to the upside.
- Inflation — More dovish. Inflation assessment shifted from stressing no progress and high pressures to acknowledging moderation and downplaying wage-push, reducing urgency.
- Labour Market — More dovish. Labour market language added a dovish note suggesting recession risk is low, softening the prior exclusively hawkish characterization.
- Rate Path — More dovish. Forward guidance shifted from conditional uncertainty about further hikes to explicitly signaling the cycle is near its end and the Fed can afford to pause, despite maintaining optionality to hike if needed.
- Balance Sheet — More dovish. Balance sheet risk assessment introduced a dovish note with resolution of banking stress reducing financial stability concerns.
Key wording
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.
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.
events in the banking system over the past two weeks are likely to result in tighter credit conditions for households and businesses, which would in turn affect economic outcomes. It is too soon to determine the extent of these effects and therefore too soon to tell how monetary policy should respond.
Inflation remains well above our longer-run goal of 2 percent... the strength of these recent readings indicates that inflation pressures continue to run high.
the labor market continues to be very tight... labor demand substantially exceeds the supply of available workers.
the median participant projects that the appropriate level of the federal funds rate will be 5.1 percent at the end of this year
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.
We are prepared to do more if greater monetary policy restraint is warranted.
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.
The labor market remains very tight.
today our decision was to raise the federal funds rate by 25 basis points.
Official documents
Background reading
Related
22 March 2023 press conference · 3 May 2023 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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