Comparative Analysis of Current vs. April FOMC Statements

Adds upside risks to inflation expectations have risen, while downside risks to growth have diminished somewhat, pushes out forecast for inflation moderating

• the new statement notes some firming in household spending, but repeats that the labor market has "softened further" and financial markets are still under "considerable stress." The statement still notes housing contraction and tight credit are weighing on economic growth, but also added the rise in energy prices as one of these factors.
• Regarding inflation, the new statement alters the expected timeframe for moderating inflation to "later this year and next year" from the prior "in the next few quarters." The Fed continues to note that uncertainty about the inflation outlook remains high, acknowledging "the continued increases in the prices of energy and some other commodities and the elevated state of some indicators of inflation expectations." (vs. Aprils prediction of moderation as commodity prices level off).
• In the third paragraph the FOMC reiterates it has done "substantial easing" to date. Today's statement adds the sentiment that downside risks to growth have "diminished somewhat", and the "upside risks to inflation and inflation expectations have increased." The committee also continues to promise it will act as needed to promote its dual mandate.
• there was one dissenter today, Fisher sought a rate hike, while Plosser rejoined the consensus.

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