Federal Reserve Press conference comparison — 31 July 2024 vs 18 December 2024

This Federal Reserve press conference comparison covers 31 July 2024 and 18 December 2024. Overall, the newer document was more hawkish. The FOMC cut rates by 25bp as expected but pivoted to a hawkish tone on future easing, emphasizing persistent inflation and a resilient labor market. This signals a slower pace of cuts ahead, with the next move likely a hold unless inflation shows further progress.

What changed

More hawkish. The FOMC cut rates by 25bp as expected but pivoted to a hawkish tone on future easing, emphasizing persistent inflation and a resilient labor market. This signals a slower pace of cuts ahead, with the next move likely a hold unless inflation shows further progress.

Inflation — More hawkish. Inflation rhetoric shifted from acknowledging progress and broadening disinflation to highlighting higher-than-expected readings and the need for restrictive policy, signaling a less confident outlook.
Labour Market — More hawkish. Labour market language moved from expressing concern about downside risks and softening to describing the market as 'solid' and 'in good shape', reducing the urgency for further cuts.
Rate Path — More hawkish. Despite a 25bp cut, forward guidance turned hawkish with explicit calls for caution, a higher median rate path, and conditions for further cuts tied to inflation progress, indicating a slower easing cycle.
Balance Sheet — Little changed. No balance sheet mentions in either document; no change in stance.

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.

18 December 2024

At today’s meeting, the Committee decided to lower the target range for the federal funds rate by ¼ percentage point, to 4¼-4½ percent.
rate path: 25bp cut confirms easing cycle continues.

Inflation has eased significantly over the past two years but remains somewhat elevated relative to our 2 percent longer-run goal.
inflation: Inflation still above target, limits easing scope.

We can therefore be more cautious as we consider further adjustments to our policy rate.
rate path: Signals slower pace of future cuts.

The median participant projects that the appropriate level of the federal funds rate will be 3.9 percent at the end of next year and 3.4 percent at the end of 2026. These median projections are somewhat higher than in September, consistent with the firmer inflation projection.
rate path: Higher median rate path indicates fewer or later cuts.

So we’re trying to steer between those two risks, and, on balance, we decided to go ahead with a further cut.
rate path: Confirmed 25bp cut, but framed as balancing risks.

we couple this decision today with the “extent and timing” language in the postmeeting statement that signals that we are at or near a point at which it will be appropriate to slow the pace of further adjustments.
rate path: Signals readiness to slow or pause cuts.

Official documents

Background reading

31 July 2024 press conference · 18 December 2024 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology