The Federal Reserve released its semi-annual monetary policy report to Congress on Friday, noting that inflation has eased substantially over the past year but remains above the central bank’s 2 percent objective.
The Fed highlighted the fact that the slowdown in inflation has occurred without a significant increase in unemployment, with the unemployment rate near historically low levels amid a relatively tight labor market.
With regard to monetary policy, the Fed reiterated that it views interest rates as likely at the peak for this tightening cycle but does not expect it will be appropriate to lower rates until it has gained greater confidence that inflation is moving sustainably toward 2 percent.
The release of monetary policy report comes ahead of Federal Reserve Chair Jerome Powell’s testimony to Congress next week.
Powell is due to testify before the House Financial Services Committee next Wednesday and the Senate Banking Committee next Thursday.
The monetary policy report also said acute stress in the banking system has receded since last March but noted a few areas of risk warrant continued monitoring.
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