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Fed policy report flags strong economy, uncertain policy outlook

Fed notes supported and strong job market

Report flags raised monetary appraisal levels

(Adds discuss productivity, Fed policy guidelines)

By Michael S. Derby

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

The report, which comes ahead of next week's testament before Congress by Fed Chair Jerome Powell, kenpoguy.com said main bank authorities remain committed to getting inflation back to 2% and noted that when it pertains to rate of interest policy modifications authorities "will thoroughly assess inbound data, the evolving outlook, and the balance of risks."

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

The Fed report said the monetary system is broadly speaking "sound and durable." But it likewise kept in mind "appraisals remained high relative to principles in a variety of markets, consisting of those for equity, corporate debt, and domestic realty."

It also said "appraisal pressures increased somewhat from currently high levels" while flagging that "vulnerabilities associated with monetary leverage remained noteworthy."

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 large companies, pipewiki.org most families and city governments. Credit was "fairly tight" for little companies and those with credit problems.

When it pertains to overall borrowing levels, total debt levels for households and non-financial companies "continued to trend down to a level that is really low relative to that in the past twenty years."

The Monetary Policy Report, which comes two times yearly, was based upon data available to the main bank since Thursday. The report normally sums up topics already well known to Fed watchers and asteroidsathome.net market individuals.

The report comes as the Fed faces a highly uncertain environment due to large-scale policy changes now contemplated or underway from President Donald Trump.

The main bank was able to lower its rate of interest target by a full percentage point last year amid alleviating inflation pressures. Future cuts, however, are highly uncertain as Trump pursues trade and workforce policies that most economic experts think will drive up inflation at a time when rate pressures remain above target. Some in the Fed have pointed straight at the federal government as a source of uncertainty limiting the guidance officials can offer about the financial policy outlook.

The Fed report had restricted remarks on the prospects for bphomesteading.com Trump trade policies however did note "some market individuals also indicated possible increases in U.S. tariffs on imports as a factor pushing the dollar higher in current months."

The release likewise said strong performance may assist the economy grow more rapidly in the future without developing inflation pressures. The Fed found that emerging artificial intelligence technology had not done much yet to goose efficiency but said the impact "might grow as AI utilize becomes more extensive."

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

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