Federal Reserve Press conference comparison — 12 June 2024 vs 31 July 2024
This Federal Reserve press conference comparison covers 12 June 2024 and 31 July 2024. Overall, the newer document was more dovish. The July FOMC statement marks a clear dovish pivot from June, with the committee explicitly flagging that a rate cut could be on the table at the September meeting if data continue to show progress on inflation and labor market cooling. The next decision is likely a cut unless inflation surprises to the upside or the labor market unexpectedly strengthens.
What changed
More dovish. The July FOMC statement marks a clear dovish pivot from June, with the committee explicitly flagging that a rate cut could be on the table at the September meeting if data continue to show progress on inflation and labor market cooling. The next decision is likely a cut unless inflation surprises to the upside or the labor market unexpectedly strengthens.
- Inflation — More dovish. Inflation progress is broadening and significant improvement is acknowledged, shifting from a neutral or cautious tone in June to a more confident dovish assessment.
- Labour Market — More dovish. The labor market assessment shifts from neutral or strong to expressing explicit concern about cooling and real downside risks, signaling increased focus on employment mandate.
- Rate Path — More dovish. Rate path guidance shifts from neutral hold to clearly opening the door to a September cut, with multiple dovish signals about approaching dialing back restriction and balanced risks.
- Balance Sheet — Little changed. No specific balance sheet signals in current document, so stance is unchanged and neutral relative to prior.
Key wording
Today, the FOMC decided to leave our policy interest rate unchanged and to continue to reduce our securities holdings.
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.
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.
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.
So if we were to see, for example, inflation moving down quickly or more or less in line with expectations, growth remains, let’s say, reasonably strong, and the labor market remains, you know, consistent with its current condition, then I would think that a, a rate cut could be on the table at the September meeting.
If, if inflation were to prove, you know, sticky and we were to see higher readings from inflation, disappointing readings, we would weigh that along with the other things.
Official documents
Background reading
Related
12 June 2024 press conference · 31 July 2024 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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