Semi-Annual Report Echoes Powell, Highlights Lack Of Core Infl Progress

The Fed's just-released semi-annual Monetary Policy Report - prepared in advance of Chair Powell's appearances before the House and Senate next week - is in line with the communications from Wednesday's FOMC meeting (PDF link here). Indeed Powell's opening commentary at the post-meeting press conference served as a sort of summary of this MPR. Highlights from the key elements:

• Inflation: "Within core services prices, housing services inflation has been high, but the monthly changes have started to ease in recent months, consistent with the slower increases in rents for new tenants that have been observed since the second half of last year... For other core services, price inflation remains elevated and has not shown signs of easing, and prospects for slowing inflation may depend in part on a further easing of tight labor market conditions."
• Labor market: "The supply of labor continued to improve" but "remains very tight"
• Financial conditions: "have tightened further since January...Bank lending conditions have tightened notably over the past year, and bank loan growth has slowed" but "despite concerns about profitability at some banks, the banking system remains sound and resilient".
• Rate policy: "The FOMC will determine meeting by meeting the extent of additional policy firming that may be appropriate"
• Rules-based policy: There is a regular section on "monetary policy rules in the current environment" that uses Taylor and other rules to estimate "prescriptions" for where the Fed funds rate should be - this report suggests a range of between 4-8% due to elevated inflation readings (see chart). However, this is more for illustrative purposes than anything - it may provide "guidance" but doesn't ever seem to have any bearing on policy-setting.