Fed policy report flags solid economy, uncertain policy outlook

Fed keeps in mind stabilized and strong job market

Report flags raised monetary appraisal levels

(Adds comments on efficiency, Fed policy guidelines)

By Michael S. Derby

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

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

The release explained the general economy as doing well in the middle of a solid and better-balanced job market and declining inflation pressures.

The Fed report said the financial system is broadly speaking "sound and resilient." But it likewise noted "appraisals remained high relative to basics in a variety of markets, including those for equity, business financial obligation, and domestic real estate."

It likewise said "appraisal pressures increased rather from currently 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 financial system and said that "credit continued to be broadly available" to mid-sized and big services, visualchemy.gallery many families and city governments. Credit was "fairly tight" for little firms and those with credit concerns.

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 extremely low relative to that in the previous twenty years."

The Monetary Policy Report, which comes twice yearly, was based upon data available to the main bank as of Thursday. The report usually sums up topics currently popular to Fed watchers and market participants.

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

The main bank had the ability to decrease its interest rate target by a complete percentage point last year amidst alleviating inflation pressures. Future cuts, setiathome.berkeley.edu however, are highly uncertain as Trump pursues trade and workforce policies that many economists believe will increase 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 financial policy .

The Fed report had actually limited discuss the potential customers for Trump trade policies however did keep in mind "some market participants also indicated prospective increases in U.S. tariffs on imports as a factor pushing the dollar higher in recent months."

The release also said strong productivity might help the economy grow quicker in the future without creating inflation pressures. The Fed found that emerging expert system technology had not done much yet to goose performance but said the influence "may grow as AI use becomes more extensive."

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 range was constant with the level recommended by policy guidelines. Officials don't utilize guidelines to set policy however see them as aspects worth considering as they identify the right level for short-term rate of interest. (Reporting by Michael S. Derby