Federal Reserve Press conference comparison — 1 May 2024 vs 12 June 2024

This Federal Reserve press conference comparison covers 1 May 2024 and 12 June 2024. Overall, the newer document was mixed. The overall stance shifts slightly hawkish on rate path due to higher rate projections, but labour market language softens, opening the door to eventual cuts if weakness emerges. The next decision likely holds rates steady while the Fed waits for more inflation progress.

What changed

Mixed. The overall stance shifts slightly hawkish on rate path due to higher rate projections, but labour market language softens, opening the door to eventual cuts if weakness emerges. The next decision likely holds rates steady while the Fed waits for more inflation progress.

Inflation — Little changed. Both documents emphasize inflation remains too high and progress is uncertain, though current acknowledges a positive CPI reading while downplaying it, leaving the overall assessment largely unchanged.
Labour Market — More dovish. Prior passages highlighted wage pressures and a high bar for cuts, while current adds explicit acknowledgment that labor could weaken quickly and the Fed would respond, lowering the bar for easing.
Rate Path — More hawkish. Current SEP projects fewer 2024 cuts than prior, and Powell explicitly states not yet confident to cut, reinforcing a higher-for-longer stance despite maintaining data dependence.
Balance Sheet — Little changed. Both documents confirm ongoing balance sheet runoff with no material change in pace or guidance.

Key wording

1 May 2024

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.

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.

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.

The Committee decided at today’s meeting to slow the pace of decline in our securities holdings, consistent with the plans we released previously. Specifically, the cap on Treasury redemptions will be lowered from the current $60 billion per month to $25 billion per month as of June 1.
balance sheet: Technical slowdown to ensure smooth transition; not a change in ultimate size.

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.

12 June 2024

Inflation has eased substantially from a peak of 7 percent to 2.7 percent but is still too high.
inflation: Inflation remains above target, reinforcing patient stance.

Today, the FOMC decided to leave our policy interest rate unchanged and to continue to reduce our securities holdings.
rate path: No change in rates, balance sheet runoff continues.

By, by so many measures, the labor market was, was kind of overheated two years ago. And we’ve seen it gradually move back into much better balance between supply and demand. ... We see gradual cooling—gradual moving toward better balance. We’re monitoring it carefully for signs of, of something more than that, but we really don’t see that.
labour market: Labor market is cooling gradually; no signs of deterioration, so no urgency to act.

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.
rate path: Risks are now more balanced, but Fed remains cautious.

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.
rate path: Reiterates need for greater confidence before cutting; no cuts imminent.

We welcome today’s reading and then hope for more like that.
inflation: Positive reaction to CPI data, but emphasizes need for more progress.

Official documents

Background reading

1 May 2024 press conference · 12 June 2024 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology