Federal Reserve Press conference comparison — 20 March 2024 vs 12 June 2024
This Federal Reserve press conference comparison covers 20 March 2024 and 12 June 2024. Overall, the newer document was more hawkish. The Fed remains hawkish on inflation and rate path, with the SEP signaling fewer cuts and patience emphasized; however, it adds a dovish nuance by acknowledging labor market risks. For the next decision, the committee is likely to hold rates steady while reiterating data dependence, with a potential easing bias emerging only if the labor market weakens or inflation decisively slows.
What changed
More hawkish. The Fed remains hawkish on inflation and rate path, with the SEP signaling fewer cuts and patience emphasized; however, it adds a dovish nuance by acknowledging labor market risks. For the next decision, the committee is likely to hold rates steady while reiterating data dependence, with a potential easing bias emerging only if the labor market weakens or inflation decisively slows.
- Inflation — More hawkish. Both documents describe inflation as above target; the current document maintains a cautious tone despite positive CPI, with no increase in confidence.
- Labour Market — More dovish. The current document introduces language about labor market vulnerability and willingness to respond to weakening, a dovish nuance not present in the prior.
- Rate Path — More hawkish. The current SEP projects fewer 2024 cuts than March, and Powell emphasizes that confidence has not improved, pushing the first cut later.
- Balance Sheet — More hawkish. The prior document flagged a possible slowdown in balance sheet runoff; the current document omits that discussion, implying no imminent change.
Key wording
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.
Inflation has eased notably over the past year but remains above our longer-run goal of 2 percent.
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.
I take the two of them together, and I think they haven't really changed the overall story, which is that of inflation moving down gradually on a sometimes-bumpy road toward 2 percent. I don't think that story has changed. I also don't think that those readings added to anyone's confidence that we're moving closer to, to that point.
the Committee wants to see more data that gives us higher confidence that inflation is moving down sustainably toward 2 percent. I also mentioned—and we don’t see this in the data right now, but if there were a significant weakening in the data, particularly in the labor market, that could also be a reason for us to begin the process of reducing rates.
As labor market tightness has eased and inflation has declined over the past year, the risks to achieving our employment and inflation goals have moved toward better balance.
Inflation has eased substantially from a peak of 7 percent to 2.7 percent but is still too high.
We’ve stated that we do not expect 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.
If the economy evolves as expected, the median participant projects that the appropriate level of the federal funds rate will be 5.1 percent at the end of this year, 4.1 percent at the end of 2025, and 3.1 percent at the end of 2026.
We welcome today’s reading and then hope for more like that.
what everyone agrees on is, it’s going to be data dependent.
Official documents
Background reading
Related
20 March 2024 press conference · 12 June 2024 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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