The Federal Reserve Board has recently published the monetary policy report that Chairman Jerome Powell will be presenting to Congress next week. Below are some key takeaways from the official publication.
- Economic activity increased at a solid pace over the first half of 2018, and the labor market has continued to strengthen.
- Inflation has moved up, and in May, the most recent period for which data are available, inflation measured on a 12-month basis was a little above the FOMC's longer-run objective of 2 percent, boosted by a sizable increase in energy prices.
- In this economic environment, the Committee judged that current and prospective economic conditions called for a further gradual removal of monetary policy accommodation.
- The negative effect of upward moves in oil prices should get smaller still as U.S. oil production grows and net oil imports decline further.
- Intensification of trade tensions pose risks to global economy.
- The Committee expects that a gradual approach to increasing the target range for the federal funds rate will be consistent with a sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term.
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