Fed's Statement Raising the Federal Funds Rate Target Range (March 22, 2023): Marked Version

The Fed raised the target range for the federal funds rate 25 basis points today to 4.75% to 5.00%. More interesting to me is its related statement. As I've noted before, the language used for these statements is very carefully considered and therefore provides highly reliable information on what is motivating the Fed. Paying close attention to the wording changes from statement to statement can be quite revealing. I've created the pdf accompanying this post to highlight those changes. Notable changes from the February 2023 statement include: 1) deletion of the reference to an 'easing of inflation' suggesting that the data does not demonstrate further easing; 2) addition of a statement to the effect that the continuing issues in the banking system are likely to constrain credit and 'weigh on economic actviity, hiring and inflation'; and 3) replacing express references to increasing the target range further with 'some additional policy firming may be appropriate' to lower the inflation rate.

Marked 2023.3.22 Statement.pdf

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