Fed Monetary Policy Report Flags Solid Economy, Raised Markets

Fed policy report flags strong economy, uncertain policy outlook

Fed notes stabilized and strong task market

Report flags raised monetary appraisal levels

(Adds discuss efficiency, Fed policy rules)

By Michael S. Derby

Feb 7 (Reuters) - The Federal Reserve's most current Monetary Policy Report to Congress, released on Friday, was upbeat about the state of the economy however cautioned about some worrying elements of the financial system.

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

The release explained the overall economy as succeeding in the middle of a solid and better-balanced task market and declining inflation pressures.

The Fed report said the financial system is broadly speaking "sound and durable." But it also noted "appraisals remained high relative to fundamentals in a variety of markets, consisting of those for equity, business financial obligation, and residential realty."

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

The report did not appear to suggest any broad danger to the economy from the financial system and said that "credit continued to be broadly available" to mid-sized and big companies, the majority of and city governments. Credit was "fairly tight" for small firms and wikitravel.org those with credit problems.

When it pertains to general borrowing levels, annunciogratis.net total debt levels for homes and non-financial firms "continued to trend down to a level that is very low relative to that in the previous 20 years."

The Monetary Policy Report, which comes twice annual, was based upon data available to the main bank since Thursday. The report normally summarizes subjects currently popular to Fed watchers and addsub.wiki market individuals.

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 was able to reduce its rate of interest target by a full portion point in 2015 amid easing inflation pressures. Future cuts, nevertheless, are highly uncertain as Trump pursues trade and workforce policies that a lot of economic experts believe will drive up inflation at a time when cost pressures remain above target. Some in the Fed have pointed straight at the government as a source of uncertainty limiting the assistance officials can provide about the financial policy outlook.

The Fed report had actually restricted talk about the prospects for wiki.eqoarevival.com Trump trade policies however did note "some market participants also pointed to potential boosts in U.S. tariffs on imports as a factor pressing the dollar higher in recent months."

The release also said strong performance may assist the economy grow quicker in the future without producing inflation pressures. The Fed discovered that emerging expert system technology hadn't done much yet to goose performance but said the impact "may grow as AI use ends up being more widespread."

While the report didn't have much guidance about the outlook for financial policy, it did acknowledge that the existing 4.25-4.50% federal funds target rate variety was consistent with the level suggested by policy guidelines. Officials do not utilize rules to set policy however view them as aspects worth thinking about as they identify the best level for short-term interest rates. (Reporting by Michael S. Derby; Editing by Andrea Ricci)