Federal Reserve Press conference comparison — 3 May 2023 vs 20 September 2023
This Federal Reserve press conference comparison covers 3 May 2023 and 20 September 2023. Overall, the newer document was more hawkish. The September meeting paused rate hikes but delivered a hawkish message through higher terminal rate projections and a majority expecting one more hike. Inflation concerns remain paramount, and the labour market is seen as rebalancing; overall, the Fed is in a wait-and-see mode with a tightening bias, likely to deliver one more hike before year-end.
What changed
More hawkish. The September meeting paused rate hikes but delivered a hawkish message through higher terminal rate projections and a majority expecting one more hike. Inflation concerns remain paramount, and the labour market is seen as rebalancing; overall, the Fed is in a wait-and-see mode with a tightening bias, likely to deliver one more hike before year-end.
- Inflation — More hawkish. Inflation language remains resolute that disinflation has a long way to go, with repeated emphasis on commitment to 2% target.
- Labour Market — More dovish. Labour market description softened from 'very tight' with strong job gains to 'tight but rebalancing', reducing urgency for further tightening.
- Rate Path — More hawkish. Rate path shifted from a hike with open-ended optionality to a pause with higher-for-longer dot projections and a majority expecting another hike, signalling a hawkish recalibration.
- Balance Sheet — Little changed. Balance sheet reduction continues as before, with no change in pace or guidance.
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.
If the economy evolves as projected, the median participant projects that the appropriate level of the federal funds rate will be 5.6 percent at the end of this year, 5.1 percent at the end of 2024, and 3.9 percent at the end of 2025.
Nevertheless, the progress—process of getting inflation sustainably down to 2 percent has a long way to go.
The labor market remains tight, but supply and demand conditions continue to come into better balance.
We’re prepared to raise rates further if appropriate, and we intend to hold policy at a restrictive level until we’re confident that inflation is moving down sustainably toward our objective.
We decided to maintain the target range for the federal funds rate where it is—at 5¼ to 5½ percent—while continuing to reduce our securities holdings.
Official documents
Background reading
Related
3 May 2023 press conference · 20 September 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.