Federal Reserve Press conference comparison — 13 December 2023 vs 1 May 2024

This Federal Reserve press conference comparison covers 13 December 2023 and 1 May 2024. Overall, the newer document was more hawkish. The May 2024 document marks a hawkish shift from December 2023, particularly on inflation and rate path, as the Fed pushes back against imminent rate cuts and stresses patience. This reduces the likelihood of a near-term cut and keeps policy restrictive.

What changed

More hawkish. The May 2024 document marks a hawkish shift from December 2023, particularly on inflation and rate path, as the Fed pushes back against imminent rate cuts and stresses patience. This reduces the likelihood of a near-term cut and keeps policy restrictive.

Inflation — More hawkish. Prior noted progress on inflation and opened the door to cuts, but current stresses inflation is still too high and progress is not assured, signalling a hawkish repricing.
Labour Market — Little changed. Labour market description remains similar—tight but improving—with wage concerns persisting; no material directional shift.
Rate Path — More hawkish. Prior hinted at rate cuts as the next discussion, but current explicitly delays cuts, requiring greater confidence in inflation progress and emphasizing patience, a clear hawkish pushback.
Balance Sheet — Little changed. Balance sheet policy remains on a steady path; the slowdown in redemption caps is technical and does not signal a change in stance.

Key wording

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.

The labor market remains tight, but supply and demand conditions continue to come into better balance.
labour market: Labor market still strong but rebalancing; supports gradual easing of wage pressures.

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.

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.

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.

1 May 2024

Today, the FOMC decided to leave our policy interest rate unchanged and to continue to reduce our securities holdings, though at a slower pace.
rate path: No change to rates; balance sheet runoff slowed as expected.

The labor market remains relatively tight, but supply and demand conditions have come into better balance.
labour market: Labor market still strong but improving balance reduces urgency.

Inflation is still too high, further progress in bringing it down is not assured, and the path forward is uncertain.
inflation: Highlights persistent inflation and uncertain outlook.

We’ve stated that we do not expect that it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably toward 2 percent. So far this year, the data have not given us that greater confidence. In particular, and as I noted earlier, readings on inflation have come in above expectations. It is likely that gaining such greater confidence will take longer than previously expected.
rate path: Delays expected rate cuts; requires more progress on inflation.

So I would say that we believe it is restrictive, and we believe [that] over time it will be sufficiently restrictive.
rate path: Powell avoids committing that current policy is sufficiently restrictive, leaving flexibility.

we didn’t see progress in the first—in the first quarter. And I’ve said that it appears, then, that it’s going to take longer for us to reach that point of confidence.
rate path: Explicitly delays confidence needed for rate cuts, pushing back market expectations.

Official documents

Background reading

13 December 2023 press conference · 1 May 2024 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology