Fed policy report flags solid economy, uncertain policy outlook

Fed notes stabilized and strong job market

Report flags raised financial appraisal levels

(Adds talk about efficiency, Fed policy guidelines)

By Michael S. Derby

Feb 7 (Reuters) - The Federal Reserve's newest Monetary Policy Report to Congress, launched on Friday, was upbeat about the state of the economy however alerted about some worrying aspects of the financial system.

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

The release explained the total economy as succeeding amidst a solid and iuridictum.pecina.cz better-balanced job 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 series of markets, consisting of those for equity, corporate debt, and residential realty."

It also 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 services, the majority of homes and city governments. Credit was "fairly tight" for little companies and wiki.dulovic.tech those with credit concerns.

When it pertains to general borrowing levels, overall debt levels for homes and non-financial firms "continued to trend down to a level that is really low relative to that in the previous 2 decades."

The Monetary Policy Report, which comes two times yearly, humanlove.stream was based upon information available to the main bank as of Thursday. The report normally summarizes topics already popular to Fed watchers and market individuals.

The report comes as the Fed deals with a highly uncertain environment due to massive policy changes now contemplated or underway from President Donald Trump.

The main bank was able to reduce its interest rate target by a full portion point in 2015 amid alleviating inflation pressures. Future cuts, nevertheless, are highly uncertain as Trump pursues trade and workforce policies that the majority of financial experts think will increase 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 restricting the assistance authorities can provide about the financial policy outlook.

The Fed report had limited discuss the prospects for Trump trade policies however did note "some market participants also indicated prospective boosts in U.S. tariffs on imports as an element pushing the dollar higher in current months."

The release likewise said strong efficiency may assist the economy grow quicker in the future without producing inflation pressures. The Fed discovered that emerging expert system innovation had not done much yet to goose productivity however said the influence "might grow as AI utilize becomes more widespread."

While the report didn't have much assistance about the outlook for monetary policy, it did acknowledge that the existing 4.25-4.50% federal funds target rate variety was constant with the level recommended by policy rules. Officials don't utilize guidelines to set policy however view them as factors worth considering as they determine the right level for systemcheck-wiki.de short-term rate of interest. (Reporting by S. Derby; Editing by Andrea Ricci)