The US Federal Reserve (Fed) stated that inflation in the country has made modest progress this year, but does not expect to reduce the policy rate until it gains more confidence that inflation is moving sustainably to the 2 percent target.
The July issue of the semi-annual Monetary Policy Report prepared by the Bank twice a year for the US Congress has been published.
"Inflation decreased markedly last year and made modest progress this year, but remains above the Federal Open Market Committee's (FOMC) 2 percent target," Fed Chairman Jerome Powell said in his report to be presented to Congress next week. expressions were used.
The report emphasized that employment increases were strong and the unemployment rate was still low, and noted that the labor market reached a better balance in the first half of the year with the decrease in the number of open jobs and the increase in labor supply.
The report stated that real gross domestic product growth was modest in the first quarter, but growth in domestic demand remained strong.
The report stated that the FOMC has kept the policy rate constant at 5.25-5.50 percent since its meeting in July 2023, and included the following statements:
The committee does not expect it to be appropriate to lower the target range until it gains greater confidence that inflation is moving sustainably towards 2 percent. Reducing policy restrictions too soon or too much could lead to a reversal of inflation progress. At the same time, reducing policy restrictions too late or too little could unnecessarily weaken economic activity and employment. The Committee will carefully consider incoming data, the evolving outlook, and the balance of risks when considering any adjustment to the target range for the federal funds rate.
"FISCAL CONDITIONS APPEAR RESTRICTIVE"
The report touched upon the progress made in personal consumption expenditures price inflation and reminded that the unemployment rate increased with the cooling labor demand and increasing labor supply.
The report stated that nominal wage growth continued to slow down in the first part of the year, and added: "The balance between labor demand and supply seems similar to the period just before the pandemic, when the labor market was relatively tight but not overheated." evaluation was made.
The report stated that financial conditions appear to be somewhat restrictive, and that the financial system continues to remain robust and resilient.
However, the report noted that there were signs of fragilities in the financial system and stated that some parts of banks' commercial real estate portfolios were facing stress.
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