Fed: Softer conditions and muted inflation warranted patient approach to further rate increases

Eren Sengezer FXStreet

"Softer conditions late in the year and muted inflation warranted a patient approach to further rate increases," the Federal Reserve explained on Friday in its semi-annual monetary policy report to Congress.

Key quotes (via Reuters)

Economy appears to have maintained a 'solid pace' of growth in second half 2018; estimates 'just under' 3 pct growth for year.
Partial government shutdown likely held down GDP growth in first quarter 2019 'somewhat,' largely due to lost work of federal workers and contractors.
Timing and size of future adjustments to the fed funds rate will depend on incoming data.
Consumer spending, business investment appear to have weakened near the end of last year.
Hourly compensation has 'stepped up' since June 2018 but growth rates remain moderate by historical standards.
Consumers' perceptions of homebuying conditions deteriorated sharply over 2018 amid higher mortgage rates and still-rising house prices.
Financial conditions have become less supportive of economic growth.
Financial system remains 'substantially more resilient' than before financial crisis but notes 'high' debt of businesses and some deterioration of credit standards in second half 2018.
Potential downside risks to international financial stability include 'political and policy uncertainty' and 'intensification of trade tensions'.
Longer-run size of Fed balance sheet will be 'considerably larger' than before financial crisis.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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