Fed Monetary Policy Report Flags Solid Economy, Raised Markets
Fed policy report flags solid economy, uncertain policy outlook
Fed keeps in mind stabilized and strong task market
Report flags raised monetary appraisal levels
(Adds discuss productivity, Fed policy rules)
By Michael S. Derby
Feb 7 (Reuters) - The Federal Reserve's most current Monetary Policy Report to Congress, launched on Friday, was upbeat about the state of the economy however cautioned about some worrying elements of the monetary system.
The report, which comes ahead of next week's testimony before Congress by Fed Chair Jerome Powell, said main bank authorities remain dedicated to getting inflation back to 2% and kept in mind that when it pertains to interest rate policy modifications authorities "will carefully assess incoming data, the evolving outlook, and the balance of dangers."
The release explained the overall economy as doing well amidst a solid and better-balanced task market and pressures.
The Fed report said the monetary system is broadly speaking "sound and durable." But it likewise noted "appraisals remained high relative to fundamentals in a variety of markets, consisting of those for equity, business debt, and domestic realty."
It likewise said "appraisal pressures increased rather from already high levels" while flagging that "vulnerabilities related to financial take advantage of remained notable."
The report did not appear to recommend any broad hazard to the economy from the monetary system and online-learning-initiative.org said that "credit continued to be broadly available" to mid-sized and large organizations, most homes and regional federal governments. Credit was "fairly tight" for little firms and tandme.co.uk those with credit problems.
When it pertains to general loaning levels, total debt levels for families and non-financial companies "continued to trend down to a level that is very low relative to that in the previous 2 years."
The Monetary Policy Report, which comes two times yearly, was based on information available to the main bank as of Thursday. The report usually sums up subjects currently well known to Fed watchers and market participants.
The report comes as the Fed faces an extremely uncertain environment due to massive policy modifications now considered or underway from President Donald Trump.
The main bank was able to reduce its interest rate target by a full percentage point last year amidst easing inflation pressures. Future cuts, nevertheless, pipewiki.org are extremely uncertain as Trump pursues trade and labor force policies that most economists believe will drive up inflation at a time when cost pressures remain above target. Some in the Fed have pointed straight at the federal government as a source of uncertainty limiting the guidance authorities can offer about the monetary policy outlook.
The Fed report had actually restricted discuss the potential customers for Trump trade policies however did note "some market individuals likewise indicated possible increases in U.S. tariffs on imports as a factor pushing the dollar higher in recent months."
The release likewise said strong productivity may assist the economy grow faster in the future without creating inflation pressures. The Fed found that emerging synthetic intelligence technology hadn't done much yet to goose efficiency however said the influence "might grow as AI use ends up being more widespread."
While the report didn't have much assistance about the outlook for monetary policy, it did acknowledge that the current 4.25-4.50% federal funds target rate range followed the level suggested by policy guidelines. Officials don't use rules to set policy but view them as factors worth considering as they figure out the right level for short-term interest rates. (Reporting by Michael S. Derby; Editing by Andrea Ricci)