GitLab

Fed policy report flags strong economy, uncertain policy outlook

Fed keeps in mind stabilized and strong task market

Report flags raised financial appraisal levels

(Adds discuss performance, Fed policy guidelines)

By Michael S. Derby

Feb 7 (Reuters) - The Federal Reserve's latest Monetary Policy Report to Congress, released on Friday, was positive about the state of the economy but cautioned about some worrying elements of the monetary system.

The report, which comes ahead of next week's testament before Congress by Fed Chair Jerome Powell, said main bank officials remain committed to getting inflation back to 2% and noted that when it pertains to rate of interest policy modifications authorities "will carefully evaluate incoming data, the evolving outlook, and the balance of threats."

The release explained the total economy as doing well amid a solid and better-balanced job market and declining inflation pressures.

The Fed report said the monetary system is broadly speaking "sound and durable." But it also noted "appraisals remained high relative to basics in a range of markets, including those for equity, corporate debt, and residential genuine estate."

It likewise said "appraisal pressures increased rather from currently high levels" while that "vulnerabilities associated with monetary take advantage of remained significant."

The report did not appear to recommend any broad danger to the economy from the financial system and said that "credit continued to be broadly available" to mid-sized and large companies, videochatforum.ro the majority of households and city governments. Credit was "fairly tight" for little companies and those with credit problems.

When it pertains to general loaning levels, overall debt levels for homes and non-financial firms "continued to trend down to a level that is very low relative to that in the past 20 years."

The Monetary Policy Report, which comes two times annual, was based upon data available to the main bank since Thursday. The report typically sums up topics already well understood to Fed watchers and market individuals.

The report comes as the Fed deals with a highly uncertain environment due to large-scale policy modifications now considered or underway from President Donald Trump.

The main bank was able to reduce its rates of interest target by a complete percentage point last year amidst reducing inflation pressures. Future cuts, however, are extremely uncertain as Trump pursues trade and workforce policies that the majority of economic experts think will drive up inflation at a time when price pressures remain above target. Some in the Fed have pointed straight at the federal government as a source of uncertainty restricting the guidance officials can offer about the monetary policy outlook.

The Fed report had actually limited comments on the prospects for Trump trade policies however did keep in mind "some market individuals likewise indicated possible increases in U.S. tariffs on imports as a factor pushing the dollar higher in current months."

The release also said strong performance might help the economy grow more rapidly in the future without creating inflation pressures. The Fed found that emerging artificial intelligence technology hadn't done much yet to goose productivity but said the impact "may grow as AI utilize ends up being more prevalent."

While the report didn't have much assistance about the outlook for monetary policy, classifieds.ocala-news.com it did acknowledge that the existing 4.25-4.50% federal funds target rate range was constant with the level suggested by policy rules. Officials don't use guidelines to set policy but view them as factors worth considering as they determine the ideal level for short-term rates of interest. (Reporting by Michael S. Derby; Editing by Andrea Ricci)