Federal Reserve Press conference comparison — 1 November 2023 vs 13 December 2023

This Federal Reserve press conference comparison covers 1 November 2023 and 13 December 2023. Overall, the newer document was more dovish. The current document marks a clear dovish pivot, particularly on rate path and inflation, while labour market shows modest softening. The Fed signals that rates are likely at peak and cuts are now being discussed, suggesting the next decision could be a cut if data allows, though optionality is maintained.

What changed

More dovish. The current document marks a clear dovish pivot, particularly on rate path and inflation, while labour market shows modest softening. The Fed signals that rates are likely at peak and cuts are now being discussed, suggesting the next decision could be a cut if data allows, though optionality is maintained.

Inflation — More dovish. The current document acknowledges inflation progress and lower expectations, with explicit mention of cuts becoming the next question, a dovish shift from the prior's emphasis on needing more confidence.
Labour Market — More dovish. Current adds explicit progress in labour market rebalancing, though notes persistent wage pressures; net shift is dovish relative to prior's neutral tight-but-easing.
Rate Path — More dovish. Current introduces explicit discussion of rate cuts as the next step, a significant dovish pivot from prior's focus on staying restrictive and potential further hikes.
Balance Sheet — Little changed. Balance sheet language remains neutral with no change to QT pace or direction; no material shift.

Key wording

1 November 2023

The Committee decided at today's meeting to maintain the target range for the federal funds rate at 5¼ to 5½ percent and to continue the process of significantly reducing our securities holdings.
rate path: Rates unchanged, QT continues as expected.

We are committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation sustainably down to 2 percent over time, and to keeping policy restrictive until we are confident that inflation is on a path to that objective.
rate path: Emphasizes staying restrictive until confidence in inflation path.

Evidence of growth persistently above potential, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy.
rate path: Explicit condition for further rate hikes.

Inflation has moderated since the middle of last year, and readings over the summer were quite favorable. But a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal. The process of getting inflation sustainably down to 2 percent has a long way to go.
inflation: Downplays recent good data, signals need for more progress.

Given how far we have come, along with the uncertainties and risks we face, the Committee is proceeding carefully.
rate path: Hints at a slower pace of action.

13 December 2023

Today, we decided to leave our policy interest rate unchanged and to continue to reduce our securities holdings.
rate path: No change in rate or balance sheet; maintains current stance.

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.
rate path: Signals peak but leaves door open for further hikes; market focus on 'near peak' vs. 'prepared to tighten'.

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.
rate path: Conditional language: peak likely but not guaranteed, keeps optionality for hikes.

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.
inflation: Acknowledges progress but emphasizes need for more data before declaring victory.

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.
rate path: First explicit acknowledgment that rate cuts are the next discussion, a major dovish pivot.

We’re not talking about altering the pace of QT right now.
balance sheet: No change to quantitative tightening, maintains current pace.

Official documents

Background reading

1 November 2023 press conference · 13 December 2023 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology