**MNI POLICY: Repeats Monetary Policy Remains Accommodative>

By Kevin Kastner and Sara Haire

     WASHINGTON (MNI) - The Federal Reserve, in it's semi-annual policy 

report to Congress released Friday, added very little to its recent 

statements regarding monetary policy and growth. Fed Chair Jay Powell 

will deliver testimony based on this report on Tuesday, and will answer 

questions from senators. He repeats his testimony on the House side on 

Wednesday. 

Here are the five most important things in the report: 

     - The Fed said that it still sees further gradual interest rate 

increases as remaining consistent with their objectives and also 

repeated that the current stance of monetary policy remains 

accommodative, adding very little to it's previous statements. 

     - When determining the appropriate path of monetary policy, the Fed 

said that they will continue to  monitor the "realized and expected 

economic conditions relative to its maximum-employment objective and its 

symmetric 2% inflation objective." The report said that policymakers 

need to use "careful judgements" when using policy rules to evaluate the 

stance of monetary policy due to highly uncertain factors like 

"estimates of the neutral interest rate." 

     - The report emphasized that the labor market and inflation 

continues to strengthen. Despite the labor market tightness, the Fed 

said that "hourly labor compensation growth has been moderate, likely 

held down in part by the weak pace of productivity growth in recent 

years." In May, inflation "was a little above" the FOMC's 2% objective, 

boosted by a "sizable increase in energy prices." However, higher oil 

prices "now imply much less of a net overall drag on the economy than 

they did in the past." 

     - Fiscal policy was highlighted to "likely provide a moderate boost 

to GDP growth this year." The Fed also said that consumer spending 

rebounded in the spring, in part due to higher disposable income "due in 

part to the implementation of the Tax Cuts and Jobs Act." Business 

investment growth "has remained robust." 

     - While there were few mentions of trade policy, they did note 

"increased concerns about trade policy both domestically and abroad, 

political developments in Europe, and the foreign economic outlook 

weighed on the longer-dated Treasury yields." 

     ** MNI Washington Bureau: 202-371-2121 ** 

[TOPICS: MMUFE$,M$U$$$,MAUDR$]