Federal Reserve Press conference comparison — 1 May 2024 vs 31 July 2024

This Federal Reserve press conference comparison covers 1 May 2024 and 31 July 2024. Overall, the newer document was more dovish. The July 2024 statement marks a clear dovish pivot from May: inflation progress is acknowledged, labour market risks are elevated, and rate cut timing is explicitly brought forward. The Fed signals that a September cut is likely conditional on continued data improvement, shifting from a patient hold posture to an easing bias.

What changed

More dovish. The July 2024 statement marks a clear dovish pivot from May: inflation progress is acknowledged, labour market risks are elevated, and rate cut timing is explicitly brought forward. The Fed signals that a September cut is likely conditional on continued data improvement, shifting from a patient hold posture to an easing bias.

Inflation — More dovish. Inflation assessment softens from 'still too high' and uncertain to 'eased notably' with broadening progress, signaling growing confidence in disinflation.
Labour Market — More dovish. Labour market description shifts from 'relatively tight' with upside wage risks to 'normalizing' with explicit concern about further cooling, increasing urgency for rate cuts.
Rate Path — More dovish. Rate guidance pivots from delaying cuts and requiring 'greater confidence' to explicitly opening the door to a September cut and emphasizing balanced risks, indicating an imminent easing bias.
Balance Sheet — Little changed. No explicit balance sheet commentary in current document; prior's reference to slowing runoff is not directly reiterated but no directional signal.

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.

31 July 2024

Inflation has eased notably over the past two years but remains somewhat above our longer-run goal of 2 percent. Total PCE prices rose 2.5 percent over the 12 months ending in June; excluding the volatile food and energy categories, core PCE prices rose 2.6 percent.
inflation: Inflation still above target but moving in right direction.

Today, the FOMC decided to leave our policy interest rate unchanged and to continue to reduce our securities holdings.
rate path: Rates unchanged as expected; no surprise.

I would—I would not like to see a material further cooling in the labor market, and that’s part of what’s behind our thinking.
labour market: Explicit concern about labor weakness, signals willingness to cut if needed.

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. The second quarter’s inflation readings have added to our confidence, and more good data would further strengthen that confidence.
rate path: Opens door to cuts as confidence grows; Q2 data helped.

The broad sense of the Committee is that the economy is moving closer to the point at which it will be appropriate to reduce our policy rate. ... If that test is met, a reduction in our policy rate could be on the table as soon as the next meeting in September.
rate path: Explicitly flags September as possible cut date.

we’re also now seeing progress in the other two big categories: nonhousing services and housing services.
inflation: Inflation progress is broadening beyond goods.

Official documents

Background reading

1 May 2024 press conference · 31 July 2024 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology