Federal Reserve Press conference comparison — 31 July 2024 vs 7 November 2024

This Federal Reserve press conference comparison covers 31 July 2024 and 7 November 2024. Overall, the newer document was more dovish. The Fed delivered a 25bp cut and maintained a dovish easing bias, citing progress on inflation and a cooling labor market. The next decision will hinge on incoming data, with the baseline expectation of gradual further cuts toward neutral.

What changed

More dovish. The Fed delivered a 25bp cut and maintained a dovish easing bias, citing progress on inflation and a cooling labor market. The next decision will hinge on incoming data, with the baseline expectation of gradual further cuts toward neutral.

Inflation — More dovish. Inflation progress acknowledged as moving much closer to target, but core remains elevated and a slightly higher print keeps caution; shift is mildly dovish as the disinflation trend is deemed intact.
Labour Market — More dovish. Labor market characterization shifted from normalizing to cooling, with explicit statement that further cooling is not needed, indicating increased dovish concern.
Rate Path — More dovish. Rate cut delivered and policy described as still restrictive; forward guidance emphasizes gradual easing toward neutral but data-dependent, confirming a dovish easing bias.
Balance Sheet — Little changed. No material change in balance sheet language or operational stance across the two documents.

Key wording

31 July 2024

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.

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.

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.

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.
rate path: Opens door to September cut with conditions, signaling easing bias.

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.
rate path: Acknowledges risk of sticky inflation delaying cuts, balancing guidance.

7 November 2024

Today, the FOMC decided to take another step in reducing the degree of policy restraint by lowering our policy interest rate by ¼ percentage point.
rate path: Rate cut confirms easing cycle continues, supportive for risk assets.

Overall, inflation has moved much closer to our 2 percent longer-run goal, but core inflation remains somewhat elevated.
inflation: Acknowledges progress but core stickiness keeps Fed cautious.

We see the risks to achieving our employment and inflation goals as being roughly in balance, and we’re attentive to the risks to both sides of our mandate.
rate path: Balanced risk assessment gives Fed flexibility to react to incoming data.

We are not on any preset course. We will continue to make our decisions meeting by meeting.
rate path: Powell emphasizes data dependence, no commitment to pace of cuts.

it appears that the moves are not, not principally about higher inflation expectations. They’re really about a sense of more likely to have stronger growth and perhaps less in the way of downside risks.
rate path: Bond yield rise driven by growth optimism, not inflation fears, reducing urgency for Fed response.

You know, we do take financial conditions into account. If they—if they’re persistent and if they’re material, then we’ll certainly take them into account in our policy. But I would say we’re not at—we’re not at that stage right now.
rate path: Fed acknowledges financial conditions but sees no immediate need to adjust policy.

Official documents

Background reading

31 July 2024 press conference · 7 November 2024 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology