Federal Reserve Press conference comparison — 26 July 2023 vs 13 December 2023
This Federal Reserve press conference comparison covers 26 July 2023 and 13 December 2023. Overall, the newer document was more dovish. The Fed pivoted decisively dovish, acknowledging progress on inflation and opening the door to rate cuts, while prior was still focused on tightening. The next meeting is likely to hold rates steady as they seek further confirmation of disinflation.
What changed
More dovish. The Fed pivoted decisively dovish, acknowledging progress on inflation and opening the door to rate cuts, while prior was still focused on tightening. The next meeting is likely to hold rates steady as they seek further confirmation of disinflation.
- Inflation — More dovish. Current document acknowledges significant progress on inflation and lower expectations, while prior only noted moderation with a long way to go.
- Labour Market — More dovish. Current highlights better balance and significant progress toward rebalancing, whereas prior described tightness as very tight but gradually cooling.
- Rate Path — More dovish. Current explicitly discusses rate cuts as the next question and signals peak likely, while prior only emphasized data-dependence and potential further hikes.
- Balance Sheet — Little changed. Both documents maintain ongoing reduction with no change in pace; current adds conditional language but no shift in stance.
Key wording
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.
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.
The labor market remains very tight. Over the past three months, job gains averaged 244,000 jobs per month, a pace below that seen earlier in the year but still a strong pace. The unemployment rate remains low at 3.6 percent.
Reducing inflation is likely to require a period of below-trend growth and some softening of labor market conditions.
We will continue to make our decisions meeting by meeting, based on the totality of the incoming data and their implications for the outlook for economic activity and inflation, as well as the balance of risks.
Today, we decided to leave our policy interest rate unchanged and to continue to reduce our securities holdings.
While we believe that our policy rate is likely at or near its peak for this tightening cycle, the economy has surprised forecasters in many ways since the pandemic, and ongoing progress—sorry—ongoing progress toward our 2 percent inflation objective is not assured. We are prepared to tighten policy further if appropriate.
The lower inflation readings over the past several months are welcome, but we will need to see further evidence to build confidence that inflation is moving down sustainably toward our goal.
The labor market remains tight, but supply and demand conditions continue to come into better balance.
Participants didn’t write down additional hikes that we believe are likely, so that’s what we wrote down. But participants also didn’t want to take the possibility of further hikes off the table.
When it will become appropriate to begin dialing back the amount of policy restraint that’s in place. So that’s really the next question, and that’s what people are thinking about and, and talking about.
Official documents
Background reading
Related
26 July 2023 press conference · 13 December 2023 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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