Federal Reserve Press conference comparison — 1 November 2023 vs 31 January 2024
This Federal Reserve press conference comparison covers 1 November 2023 and 31 January 2024. Overall, the newer document was more dovish. January 2024 represents a clear dovish pivot from November 2023: the Fed now indicates the policy rate is at its peak and cuts are likely later this year, conditional on sustained inflation progress. The balance sheet discussion also hints at eventual QT tapering, reinforcing the easing bias for the next decision.
What changed
More dovish. January 2024 represents a clear dovish pivot from November 2023: the Fed now indicates the policy rate is at its peak and cuts are likely later this year, conditional on sustained inflation progress. The balance sheet discussion also hints at eventual QT tapering, reinforcing the easing bias for the next decision.
- Inflation — More dovish. Inflation assessment shifted from downplaying progress ('only the beginning') to acknowledging six months of good data and growing confidence, though still cautious.
- Labour Market — More dovish. Labour market narrative softened: prior emphasized need for softening, current highlights easing tightness and is 'not looking for a weaker labor market'.
- Rate Path — More dovish. Rate path pivoted from 'not thinking about rate cuts' and open to further hikes to explicitly flagging cuts later this year, albeit conditional on greater confidence.
- Balance Sheet — More dovish. Balance sheet stance shifted from no change to QT to signaling upcoming in-depth discussions and flexibility on tapering runoff.
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.
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.
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.
Financial conditions have tightened significantly in recent months, driven by higher longer-term bond yields, among other factors.
Inflation has been coming down, but it’s still running well above our 2 percent target.
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.
So at this meeting, we did have some discussion of the balance sheet, and we’re planning to begin in-depth discussions of balance sheet issues at our next meeting in March.
We have six months of good inflation data. The question really is, that six months of good inflation data—is it sending us a true signal that we are, in fact, on a path—a sustainable path down to 2 percent inflation?
Official documents
Background reading
Related
1 November 2023 press conference · 31 January 2024 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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