We report below the main conclusions of the Semiannual Monetary Policy Report of the United States Federal Reserve published on Friday, according to Reuters.
Main conclusions
“Financial conditions have tightened further since June and are significantly tighter than a year ago.”
“It is necessary to continue to increase the federal funds rate target.”
“We are firmly determined to bring inflation back to 2%.”
“Corporate credit quality remains strong, but some indicators of future corporate defaults are somewhat elevated.”
“Financial vulnerabilities remain subdued overall.”
“Negative net income does not impede monetary policy work.”
“Forecast to return to positive net income at some point.”
“Market liquidity remains low in Treasury and other key markets compared to pre-pandemic levels.”
“Getting inflation back to 2% will likely require a period of below-trend growth, some softening in labor market conditions.”
“Underlying momentum in the economy is likely to remain weak.”
“Valuation pressures in equity markets have increased modestly.”
“In the basic services sector, excluding housing, inflation remains high; prospects for a slowdown may depend in part on an easing of tight labor market conditions.”
“External core inflation remains high and inflationary pressures are ample.”
“Some signs of increased stress for lower-income households as near-prime and subprime delinquency rates have risen.”
“Fed Control Rate Effective in Maintaining Fed Funds Rate.”
“It will adjust the balance sheet reduction process if necessary.”
“The strong take on reverse repos reflects market rates and investor caution.”
“The labor market has remained extremely tight and there is a significant labor supply shortfall relative to levels anticipated before the pandemic.”
“Tense labor market conditions have largely erased the pandemic-induced widening employment gaps between demographic groups.”
“Officials are aware of the monetary policy rules, but they do not use them to direct policy.”
“Rate hikes have narrowed the gaps between monetary policy rules and the real level.”
“The labor force participation rate is likely to remain well below its pre-pandemic level.”
Market reaction
The Dollar Index did not immediately react to this publication and traded sideways at 104.93 points.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
