Federal Reserve Press conference comparison — 14 June 2023 vs 26 July 2023
This Federal Reserve press conference comparison covers 14 June 2023 and 26 July 2023. Overall, the newer document was more dovish. The July statement delivered a 25bp hike but the overall tone was less hawkish than June, with more emphasis on data dependence and less conviction about additional tightening. This suggests the Fed is likely to pause in September unless data surprises to the upside.
What changed
More dovish. The July statement delivered a 25bp hike but the overall tone was less hawkish than June, with more emphasis on data dependence and less conviction about additional tightening. This suggests the Fed is likely to pause in September unless data surprises to the upside.
- Inflation — Little changed. Inflation description remains largely unchanged ('moderated somewhat' and 'long way to go'), with added references to elevated core but also room for patience, resulting in no net shift.
- Labour Market — More dovish. Prior characterization of 'very tight' labour market shifts to acknowledgement of potential softening and need for further easing in labour conditions, a dovish turn.
- Rate Path — More dovish. Forward guidance shifts from explicit projection of further hikes to a data-dependent approach with optionality for both hike and hold, and introduction of soft landing and eventual cuts narrative—a dovish reduction in tightening bias.
- Balance Sheet — Little changed. No substantial change in balance sheet policy; a minor downplay of balance sheet as active tool maintains neutral stance.
Key wording
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 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 median participant projects that the appropriate level of the federal funds rate will be 5.6 percent at the end of this year
we judged it prudent to hold the target range steady to allow the Committee to assess additional information and its implications for monetary policy.
The labor market remains very tight.
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.
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.
It will take time, however, for the full effects of our ongoing monetary restraint to be realized, especially on inflation.
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
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.
Official documents
Background reading
Related
14 June 2023 press conference · 26 July 2023 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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