Semi-Annual Policy Report: Fed needs greater confidence before moving to rate cuts

In its Semi-Annual Monetary Policy Report published on Friday, the Federal Reserve (Fed) noted that they have seen modest further progress on inflation this year but added that they still need greater confidence before moving to rate cuts. The US Dollar Index showed no immediate reaction to this publication and was last seen losing 0.1% on the day at 105.03.

Key Takeaways

“Labour supply and demand resembles period right before the pandemic, when the labor market was relatively tight but not overheated.”

“Expecting housing-related inflation pressures to gradually decline.”

“Despite improvements, still significant disparities in job market.”

“Financial conditions appear somewhat restrictive on balance, bank lending pace somewhat tepid.”

“Financial system remains sound and resilient though parts of banks’ commercial real estate portfolios are facing stress.”

“Liquidity at most domestic banks remain ample.”

“Valuations high relative to fundamentals in major asset classes.”