Federal Reserve Press conference comparison — 22 March 2023 vs 26 July 2023
This Federal Reserve press conference comparison covers 22 March 2023 and 26 July 2023. Overall, the newer document was more dovish. The July 2023 statement shows a more balanced tone than March: inflation language gains a dovish patience nuance, labour market softens slightly, and rate path returns to neutral data-dependence after March's dovish tilt. This suggests the committee is comfortable pausing if data allow, but remains ready to hike if inflation persists.
What changed
More dovish. The July 2023 statement shows a more balanced tone than March: inflation language gains a dovish patience nuance, labour market softens slightly, and rate path returns to neutral data-dependence after March's dovish tilt. This suggests the committee is comfortable pausing if data allow, but remains ready to hike if inflation persists.
- Inflation — More dovish. Prior stressed inflation 'remains well above' with no patience, current adds 'we can afford to be patient' despite still elevated core.
- Labour Market — More dovish. Prior described labor market as 'very tight' with demand exceeding supply, current acknowledges need for 'some further softening'.
- Rate Path — Little changed. Prior had a clear dovish shift by removing 'ongoing increases', current returns to data-dependent language with both hike and cut possibilities, balancing hawkish and dovish signals.
- Balance Sheet — Little changed. Prior had no balance sheet mention, current merely confirms ongoing reduction at a brisk pace.
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 we took another step by raising our policy interest rate ¼ percentage point, and we are continuing to reduce our securities holdings at a brisk pace.
Looking ahead, we will continue to take a data-dependent approach in determining the extent of additional policy firming that may be appropriate.
It will take time, however, for the full effects of our ongoing monetary restraint to be realized, especially on inflation.
Inflation has moderated somewhat since the middle of last year. Nonetheless, the process of getting inflation back down to 2 percent has a long way to go.
the historical record—we have to be honest about the historical record, which does suggest that when central banks go in and slow the economy to bring down inflation, the result tends to be some softening in labor market conditions. And so that is still the, the likely outcome here.
I would say it is certainly possible that we would raise funds again at the September meeting if the data warrant it, and I would also say it’s possible that we would choose to hold steady at that meeting. We’re going to be making careful assessments, as I said, meeting by meeting
Official documents
Background reading
Related
22 March 2023 press conference · 26 July 2023 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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