Fed policy report flags solid economy, uncertain policy outlook

Fed notes supported and strong job market

Report flags raised monetary appraisal levels

(Adds discuss productivity, Fed policy guidelines)

By Michael S. Derby

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

The report, which comes ahead of next week’s testament before Congress by Fed Chair Jerome Powell, said main bank authorities remain dedicated to getting inflation back to 2% and noted that when it pertains to rates of interest policy modifications officials “will carefully examine incoming data, the progressing outlook, and the balance of risks.”

The release explained the total economy as doing well in the middle of a strong and better-balanced task market and decreasing inflation pressures.

The Fed report said the financial system is broadly speaking “sound and durable.” But it also noted “appraisals remained high relative to basics in a variety of markets, including those for equity, business debt, and property property.”

It also said “appraisal pressures increased somewhat from currently high levels” while flagging that “vulnerabilities associated with financial utilize remained notable.”

The report did not appear to suggest any broad hazard to the economy from the financial system and said that “credit continued to be broadly available” to mid-sized and online-learning-initiative.org big companies, oke.zone a lot of households and city governments. Credit was “fairly tight” for wiki.rrtn.org little firms and those with credit problems.

When it pertains to general loaning levels, yewiki.org overall debt levels for households and non-financial firms “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 twice yearly, was based on data available to the main bank since Thursday. The report generally sums up subjects currently popular to Fed watchers and market participants.

The report comes as the Fed faces an extremely uncertain environment due to large-scale policy changes now contemplated or underway from President Donald Trump.

The main bank had the ability to decrease its rate of interest target by a full percentage point in 2015 amid alleviating inflation pressures. Future cuts, however, are highly uncertain as Trump pursues trade and workforce policies that a lot of economists believe will drive up inflation at a time when price pressures remain above target. Some in the Fed have pointed straight at the government as a source of uncertainty restricting the guidance officials can supply about the monetary policy outlook.

The Fed report had actually restricted discuss the prospects for Trump trade policies but did keep in mind “some market participants likewise pointed to prospective increases in U.S. tariffs on imports as a factor pressing the dollar higher in recent months.”

The release also said strong efficiency may help the economy grow more quickly in the future without producing inflation pressures. The Fed found that emerging synthetic intelligence technology had not done much yet to goose performance however said the impact “may grow as AI utilize becomes more widespread.”

While the report didn’t have much guidance about the outlook for monetary policy, historydb.date it did acknowledge that the present 4.25-4.50% federal funds target rate range was constant with the level suggested by policy guidelines. Officials do not to set policy however see them as factors worth considering as they determine the best level for short-term interest rates. (Reporting by Michael S. Derby