Here’s what changed in the new Fed statement

The Federal Open Market Committee (FOMC), the monetary policymaking body of the Federal Reserve, recently released a statement that differs from its earlier statement issued in January.

Notably, the new statement omits certain phrases or makes changes in language, reflecting shifts in the Fed’s assessments and outlook.

Previously, the FOMC stated that the COVID-19 pandemic “is having a significant impact on economic activity and inflation.”

However, this statement has been removed, indicating that the Fed believes the pandemic’s economic impact is waning.

Another omitted phrase from the January statement reads, “Inflation is running well above 2 percent.”

This omission suggests that the Fed acknowledges some moderation in inflation, although it remains elevated.

In place of these removed phrases, the new statement introduces a phrase acknowledging “upward pressure on wages and prices,” reflecting the Fed’s ongoing concern about inflationary pressures.

Moreover, the new statement emphasizes the Fed’s “ongoing commitment to achieving price stability” and states that “with price pressures continuing to run well above the Committee’s 2 percent objective, the Committee anticipates that ongoing increases in the target range will be appropriate.”

This language indicates that the Fed remains focused on bringing inflation under control and is prepared to raise interest rates further to do so.

The changes in the FOMC statement signal that while the Fed acknowledges progress in economic recovery, inflation remains a primary concern.

Accordingly, the Fed is likely to continue raising interest rates in the coming months to combat persistent price pressures.