In its semi-annual monetary policy report released on Friday, the Federal Reserve (Fed) said it had made some modest progress on inflation this year but added it still needed more confidence before deciding to cut interest rates, Reuters reported.

Key conclusions

“Labor supply and demand are reminiscent of the period just before the pandemic, when the labor market was relatively tight but not overheated.”

“We expect housing-related inflationary pressures to gradually decline.”

“Despite improvements, significant disparities remain in the labor market.”

“Financial conditions appear somewhat tight overall, with the pace of bank lending remaining moderate.”

“The financial system remains solid and resilient, although parts of banks’ commercial real estate portfolios are facing pressure.”

“Liquidity remains high in most domestic banks.”

“Valuations are high relative to the fundamentals of major asset classes.”

Market reaction

The US dollar index did not immediately react to the release and was last down 0.1% on the day to 105.03.