Federal Reserve Press conference comparison — 3 May 2023 vs 14 June 2023
This Federal Reserve press conference comparison covers 3 May 2023 and 14 June 2023. Overall, the newer document was more hawkish. The Fed paused rate increases in June but delivered decisively hawkish guidance: nearly all participants expect further hikes, July is 'live', and cuts are ruled out for 2023. This signals that the next move is likely a hike, with the committee prioritizing inflation control over growth risks.
What changed
More hawkish. The Fed paused rate increases in June but delivered decisively hawkish guidance: nearly all participants expect further hikes, July is 'live', and cuts are ruled out for 2023. This signals that the next move is likely a hike, with the committee prioritizing inflation control over growth risks.
- Inflation — More hawkish. The current document reinforces the prior's hawkish inflation assessment with additional detail on stickiness in core services and upside risks, signaling a longer path to 2%.
- Labour Market — Little changed. The current document retains a hawkish characterization of labor market tightness but adds recognition of some loosening, balancing the tone relative to the prior document's unqualified tightness.
- Rate Path — More hawkish. Despite the operational pause, the current document significantly strengthens hawkish forward guidance by signaling further hikes, ruling out cuts, and highlighting upward revisions to the median rate path.
- Balance Sheet — Little changed. The current document introduces a reassuring assessment of balance sheet runoff and financial stability risks, suggesting no imminent concerns that would force a change in QT policy.
Key wording
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.
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. Over the first three months of the year, job gains averaged 345,000 jobs per month.
But the strains that emerged in the banking sector in early March appear to be resulting in even tighter credit conditions for households and businesses. In turn, these tighter credit conditions are likely to weigh on economic activity, hiring, and inflation.
We are prepared to do more if greater monetary policy restraint is warranted.
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.
inflation pressures continue to run high, and the process of getting inflation back down to 2 percent has a long way to go.
labor demand still substantially exceeds the supply of available workers.
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
3 May 2023 press conference · 14 June 2023 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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