Federal Reserve Press conference comparison — 7 November 2024 vs 18 December 2024
This Federal Reserve press conference comparison covers 7 November 2024 and 18 December 2024. Overall, the newer document was more hawkish. The December 2024 FOMC statement delivered a 25bp cut but shifted hawkishly relative to November, with higher rate projections, explicit caution on further cuts, and increased inflation concerns. The next decision is likely a hold or a smaller cut, contingent on inflation progress.
What changed
More hawkish. The December 2024 FOMC statement delivered a 25bp cut but shifted hawkishly relative to November, with higher rate projections, explicit caution on further cuts, and increased inflation concerns. The next decision is likely a hold or a smaller cut, contingent on inflation progress.
- Inflation — More hawkish. The prior document had mixed inflation signals with some dovish tones, while the current document emphasizes higher inflation readings and a slower disinflation path, marking a hawkish shift.
- Labour Market — More hawkish. Prior labour market language stressed cooling and no need for further softening (dovish), but current language describes the market as gradually cooling and in solid shape, a less dovish stance.
- Rate Path — More hawkish. The prior document leaned neutral/dovish with a focus on easing toward neutral, while the current document explicitly signals a slower pace of cuts, higher median rate projections, and caution, a clear hawkish shift.
- Balance Sheet — Little changed. No balance sheet passages were present in either document, so no change.
Key wording
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.
The labor market is not a source of significant inflationary pressures.
Overall, inflation has moved much closer to our 2 percent longer-run goal, but core inflation remains somewhat elevated.
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.
We are not on any preset course. We will continue to make our decisions meeting by meeting.
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.
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.
we have the labor market forecast as being in good shape, we are also mindful that it is still out there very gradually cooling, so far in an orderly, gradual way.
Inflation has eased significantly over the past two years but remains somewhat elevated relative to our 2 percent longer-run goal.
We can therefore be more cautious as we consider further adjustments to our policy rate.
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.
So we’re trying to steer between those two risks, and, on balance, we decided to go ahead with a further cut.
Official documents
Background reading
Related
7 November 2024 press conference · 18 December 2024 press conference · Earlier meeting · Later meeting · Previous comparison · Next comparison · Methodology
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