by Howard Schneider
(Reuters) – Inflation in key U.S. services sectors “remains elevated and has shown no signs of easing,” the U.S. Federal Reserve (Fed) said in its latest monetary policy report to Congress.
This report provides an overview of the economic situation in the United States before the hearing on Capitol Hill of Fed Chairman Jerome Powell, scheduled for next week.
The Fed’s hope for a slowdown in inflation “may depend in part on a further easing in labor market tensions”, which means a likely increase in unemployment in the United States, can we read in the report.
“The demand for labor has declined in many sectors of the economy, but it continues to outstrip the supply of available workers, and the number of job vacancies remains high,” the report added. Wage growth slowed in the first part of the year, but “remains above the rate consistent with long-term inflation of 2%”, it also writes.
The report notes that bank credit has “tightened significantly” over the past year and is expected to contract further following the failure of several regional banks in March.
“Despite concerns about the profitability of some banks, the banking system remains healthy and resilient,” the report also said.
(Report Howard Schneider; French version Claude Chendjou, edited by Blandine Hénault)
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