Here are two statements from the Federal Reserve’s Federal Open Market Committee (FOMC) immediately following their interest rate decisions of August 1, 2018 and September 26, 2018.

August 1, 2018 – In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1.75-2.00%. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation.

September 26, 2018 – In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 2.00-2.25%. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation.

As you can see, the second statement eliminated language around its belief that monetary policy remained accommodative, which it clearly stated in the August release. Since the media and analysts closely track changes in Fed statements to glean intent with regards to future rate increases and current and future economic conditions, the natural conclusion was that the 25 bps rate hike in September moved the Fed from “accommodative” to “not accommodative”, though not necessarily “restrictive”.

Interestingly, Chairman Powell’s subsequent comments to PBS six days after the September FOMC meeting seem to cast doubts on that conclusion.

“The really extremely accommodative low interest rates that we needed when the economy was quite weak, we don’t need those anymore. They’re not appropriate anymore,” Powell said.

“Interest rates are still accommodative, but we’re gradually moving to a place where they will be neutral,” he added. “We may go past neutral, but we’re a long way from neutral at this point, probably.”

So, is monetary policy currently accommodative or not?

This article provides a few charts aimed toward making sense of the contradictory statements from Fed officials so you can decide for yourself if policy is accommodative. Given the importance that monetary policy plays in asset pricing, a clear understanding of the Fed’s intent is extremely valuable. For more on our latest thoughts regarding Fed policy intentions and market expectations, please read our article Everyone Hears the Fed, But Few Listen.