March 2024 Monetary Policy Report

The report now describes inflation as having eased substantially, with disinflation occurring without a significant rise in unemployment. It states the FOMC has held the policy rate steady since July 2023 and considers it likely at its peak, with simple rule prescriptions close to the current range. Balance sheet runoff has reduced holdings by about $1.4 trillion, and projections show lower inflation and unemployment paths.

Inflation

• The report now describes inflation as having eased substantially over the past year, whereas the previous report said it had only moderated somewhat. Read the section
  Quotes

  Previous report: “Although inflation has moderated somewhat since the middle of last year, it remains well above the Federal Open Market Committee's (FOMC) objective of 2 percent.”

  This report: “While inflation remains above the Federal Open Market Committee's (FOMC) objective of 2 percent, it has eased substantially over the past year”

• The report now describes inflation as having slowed notably, with PCE inflation at 2.4 percent, down from a peak of 7.1 percent, whereas previously it was elevated at 4.8 percent. Read the section
  Quotes

  Previous report: “The trimmed mean measure of PCE prices from the Federal Reserve Bank of Dallas also remained elevated, increasing 4.8 percent over the 12 months to April, little changed since last fall.”

  This report: “The price index for personal consumption expenditures (PCE) rose 2.4 percent over the 12 months ending in January, down from a peak of 7.1 percent in 2022, though still above the Federal Open Market Committee's (FOMC) longer-run objective of 2 percent.”

• The report now projects PCE inflation declining from 2.8 percent in 2023 to 2.0 percent by 2026, a lower path than the previous report's 3.2 percent in 2023 to 2.1 percent in 2025. Read the section
  Quotes

  Previous report: “Uncertainty and risks in projections of PCE inflation — Median: 2023: 3.2; 2024: 2.5; 2025: 2.1”

  This report: “Median: 2023: 2.8; 2024: 2.4; 2025: 2.1; 2026: 2.0”

Labor market

• The report now notes that disinflation occurred without a significant rise in unemployment, replacing the earlier expectation that below-trend growth and labor softening would be needed. Read the section
  Quotes

  Previous report: “Bringing inflation back to 2 percent will likely require a period of below-trend growth and some softening of labor market conditions.”

  This report: “the slowing in inflation has occurred without a significant increase in unemployment”

• The report now projects the unemployment rate at 4.1 percent for 2024–2026, whereas the previous report projected a rise to 4.5 percent by 2024–2025. Read the section
  Quotes

  Previous report: “Uncertainty and risks in projections of the unemployment rate — Median: 2023: 4.1; 2024: 4.5; 2025: 4.5”

  This report: “Median: 2023: 3.8; 2024: 4.1; 2025: 4.1; 2026: 4.1”

Monetary policy

• The report now states the FOMC has held the target range at 5-1/4 to 5-1/2 percent since July 2023, whereas the previous report described a 75-basis-point increase to that range. Read the section
  Quotes

  Previous report: “The FOMC has raised the target range for the federal funds rate a further 75 basis points since the start of the year, bringing the range to 5 to 5-1/4 percent.”

  This report: “The FOMC has maintained the target range for the federal funds rate at 5-1/4 to 5-1/2 percent since its July 2023 meeting.”

• The report now says the policy rate is likely at its peak for the tightening cycle, whereas the previous report only noted a slowdown in the pace of tightening. Read the section
  Quotes

  Previous report: “the FOMC slowed the pace of policy tightening relative to last year.”

  This report: “The Committee views the policy rate as likely at its peak for this tightening cycle, which began in early 2022.”

• The report now reports a total reduction in securities holdings of about $1.4 trillion since runoff began, compared with a $420 billion decline since January in the previous report. Read the section
  Quotes

  Previous report: “The Federal Reserve has reduced its securities holdings by about $420 billion since January.”

  This report: “the Federal Reserve has reduced its securities holdings about $640 billion since mid-June 2023, bringing the total reduction in securities holdings since the start of balance sheet runoff to about $1.4 trillion.”

• The report now says simple rule prescriptions are close to the current target range, whereas the previous report said they called for elevated levels of the federal funds rate. Read the section
  Quotes

  Previous report: “simple monetary policy rules have called for elevated levels of the federal funds rate.”

  This report: “the policy rate prescriptions of most simple monetary policy rules have decreased recently and now call for levels of the federal funds rate that are close to the current target range for the federal funds rate.”

Projections

• The report now presents projections for 2023–2026, whereas the previous report covered 2023–2025. Read the section
  Quotes

  Previous report: “meeting participants submitted their projections of the most likely outcomes for real gross domestic product (GDP) growth, the unemployment rate, and inflation for each year from 2023 to 2025 and over the longer run.”

  This report: “In conjunction with the Federal Open Market Committee (FOMC) meeting held on December 12–13, 2023, meeting participants submitted their projections of the most likely outcomes for real gross domestic product (GDP) growth, the unemployment rate, and inflation for each year from 2023 to 2026 and over the longer run.”

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