Federal Reserve Press conference comparison — 20 March 2024 vs 1 May 2024
This Federal Reserve press conference comparison covers 20 March 2024 and 1 May 2024. Overall, the newer document was more hawkish. The committee delivered a clear hawkish shift, downgrading the outlook for near-term rate cuts and emphasizing persistent inflation. The next decision is likely to hold rates unchanged, with communication focused on waiting for more progress on inflation.
What changed
More hawkish. The committee delivered a clear hawkish shift, downgrading the outlook for near-term rate cuts and emphasizing persistent inflation. The next decision is likely to hold rates unchanged, with communication focused on waiting for more progress on inflation.
- Inflation — More hawkish. Inflation assessments shifted from 'eased notably' to 'still too high' and 'progress not assured', with multiple passages highlighting persistent inflation and delayed disinflation.
- Labour Market — More hawkish. Labour market characterisation remains 'tight but in better balance', but new passages emphasize wage inflation risks and set a high bar for cuts based on labour weakening, adding a hawkish tilt.
- Rate Path — More hawkish. Rate guidance moved from signalling potential cuts later in 2024 to explicitly delaying cuts, citing lack of progress in Q1 and the need for patience, while ruling out hikes.
- Balance Sheet — Little changed. Balance sheet slowdown plan was implemented as expected; no directional change in language.
Key wording
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.
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 it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably down toward 2 percent.
As labor market tightness has eased and progress on inflation has continued, the risks to achieving our employment and inflation goals are coming into better balance.
Inflation has eased notably over the past year but remains above our longer-run goal of 2 percent.
The labor market remains relatively tight, but supply and demand conditions continue to come into better balance.
Today, the FOMC decided to leave our policy interest rate unchanged and to continue to reduce our securities holdings, though at a slower pace.
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.
So I would say that we believe it is restrictive, and we believe [that] over time it will be sufficiently restrictive.
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.
Inflation is still too high, further progress in bringing it down is not assured, and the path forward is uncertain.
The labor market remains relatively tight, but supply and demand conditions have come into better balance.
Official documents
Background reading
Related
20 March 2024 press conference · 1 May 2024 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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