July 2009 Monetary Policy Report

The report now describes easing financial conditions and a diminishing pace of job loss, while noting a sharp global decline. It also highlights a projected rise in unemployment and a gradual recovery, with the FOMC keeping rates unchanged and anticipating low rates for an extended period.

Inflation

• The report now describes inflation risks as roughly balanced, whereas the previous report saw risks as balanced or tilted to the downside. Read the section
  Quotes

  Previous report: “all participants saw the risks to the inflation outlook as either balanced or tilted to the downside”

  This report: “Most participants saw the risks surrounding their inflation outlook as roughly balanced”

Labor market

• The report now describes the pace of job loss as diminishing somewhat, whereas the previous report noted a significant worsening in labor market conditions. Read the section
  Quotes

  Previous report: “the unemployment rate has risen to its highest level since the early 1990s”

  This report: “employment declines have remained sizable--although the pace of job loss has diminished somewhat from earlier in the year”

• The report now projects the unemployment rate to rise in coming quarters, whereas the previous report projected a substantial increase, with the 2009 central tendency raised from 8.5-8.8 percent to 9.8-10.1 percent. Read the section
  Quotes

  Previous report: “Participants' projections for the average unemployment rate during the fourth quarter of 2009 had a central tendency of 8.5 to 8.8 percent, markedly higher than last December's actual unemployment rate of 7.2 percent--the latest available figure at the time of the January FOMC meeting.”

  This report: “all FOMC participants projected that real gross domestic product (GDP) would contract over the entirety of this year and that the unemployment rate would increase in coming quarters.”  ·  “Their projections for the average unemployment rate during the fourth quarter of 2009 had a central tendency of 9.8 to 10.1 percent”

Economic activity

• The report now notes a modest improvement in the near-term output outlook relative to April, whereas the previous report described a significant weakening since October. Read the section
  Quotes

  Previous report: “FOMC participants viewed the outlook for economic activity and inflation as having weakened significantly since last October, when their last projections were made.”

  This report: “Almost all participants viewed the near-term outlook for domestic output as having improved modestly relative to the projections they made at the time of the April FOMC meeting”

• The report now says the recovery is expected to be gradual in 2010 and strengthen in late 2010 and 2011, whereas the previous report described the recovery as unusually gradual and prolonged. Read the section
  Quotes

  Previous report: “participants generally expected that the recovery would be unusually gradual and prolonged”

  This report: “participants generally expected the recovery to be gradual in 2010.”  ·  “they anticipated that the upturn would strengthen in late 2010 and in 2011 to a pace exceeding the growth rate of potential GDP.”

Financial conditions

• The report introduces that financial market conditions had generally strengthened by late April and improved notably by end-June, a topic absent from the previous report. Read the section
  Quotes

  This report: “Participants noted that financial market conditions had generally strengthened”  ·  “Conditions in financial markets had improved notably by the end of June, although market functioning in many areas remained impaired”

Financial stability

• The report now notes that financial conditions have eased somewhat, a shift from the previous emphasis on persistent stress and impaired credit flows. Read the section
  Quotes

  Previous report: “significant stress persists in most markets, and financial institutions remain under considerable pressure; as a result, the flow of credit to households and businesses continues to be impaired.”

  This report: “financial conditions have eased somewhat ... Nonetheless, credit conditions for many households and businesses remain tight, and financial markets are still stressed.”

International

• The report now includes a new topic on economic activity abroad, noting a sharp decline in the first quarter followed by a slower pace of decline. Read the section
  Quotes

  This report: “Economic activity abroad plummeted in the first quarter and has continued to fall, albeit more slowly, in recent months.”

Monetary policy

• The report now states the Federal Reserve kept its target range unchanged, whereas the previous report described a 325 basis point cut and a new target range. Read the section
  Quotes

  Previous report: “at its December meeting, the Committee established a target range for the federal funds rate of 0 to 1/4 percent”

  This report: “The Federal Reserve kept its target for the federal funds rate at a range between 0 and 1/4 percent”

• The report now says the FOMC anticipated exceptionally low rates for an extended period, whereas the previous report only expected sharp contraction in activity. Read the section
  Quotes

  Previous report: “The Committee expected economic activity to contract sharply in the fourth quarter of 2008 and in early 2009.”

  This report: “it anticipated that economic conditions were likely to warrant exceptionally low levels of the federal funds rate for an extended period.”

These points are generated automatically by comparing the two reports' text, and each quote is checked against the report it's cited from.