Federal Reserve Press conference comparison — 20 September 2023 vs 31 January 2024
This Federal Reserve press conference comparison covers 20 September 2023 and 31 January 2024. Overall, the newer document was more dovish. The January 2024 FOMC meeting marks a clear dovish pivot relative to September 2023: the committee now views the policy rate as at its peak and anticipates cuts later this year, conditional on sustained inflation progress. This shift signals that the next policy move will likely be a cut, barring a resurgence in inflation.
What changed
More dovish. The January 2024 FOMC meeting marks a clear dovish pivot relative to September 2023: the committee now views the policy rate as at its peak and anticipates cuts later this year, conditional on sustained inflation progress. This shift signals that the next policy move will likely be a cut, barring a resurgence in inflation.
- Inflation — More dovish. Prior emphasized 'long way to go' and 'worst thing is fail to restore price stability'; current acknowledges 'eased notably' and 'six months of good data', a clear softening.
- Labour Market — Little changed. Prior described market as 'tight but rebalancing'; current says 'at or nearing normal' and 'not looking for weaker labor market', no material shift.
- Rate Path — More dovish. Prior had hawkish bias with 'one more hike likely' and 'higher for longer'; current declares 'policy rate likely at its peak' and 'appropriate to begin dialing back restraint' later this year.
- Balance Sheet — Little changed. Prior had no balance sheet guidance; current introduces discussion of QT tapering but emphasizes independence from rate decisions and no plan to slow runoff yet.
Key wording
Today, we decided to leave our policy interest rate unchanged and to continue to reduce our securities holdings.
The labor market remains tight, but supply and demand conditions continue to come into better balance.
Nevertheless, the progress—process of getting inflation sustainably down to 2 percent has a long way to go.
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.
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.
Today, the FOMC decided to leave our policy interest rate unchanged and to continue to reduce our securities holdings.
We’re not looking for a weaker labor market. We’re looking for inflation to continue to come down, as it has been coming down for the last six months.
Inflation has eased notably over the past year but remains above our longer-run goal of 2 percent.
As labor market tightness has eased and progress on inflation has continued, the risks to achieving our employment and inflation goals are moving into better balance.
We believe that our policy rate is likely at its peak for this tightening cycle and that, if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.
The Committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.
Official documents
Background reading
Related
20 September 2023 press conference · 31 January 2024 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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