US Fed says policy appropriate, risks to economy receding

A man walks by the U.S. Federal Reserve building in Washington D.C., the United State

Washington,  In its semi-annual monetary policy report delivered to Congress, the US Federal Reserve has said that the current stance of monetary policy is appropriate as downside risks to the US economy have receded.

“Downside risks to the US outlook seem to have receded in the latter part of the year (2019), as the conflicts over trade policy diminished somewhat, economic growth abroad showed signs of stabilising, and financial conditions eased,” the report said on Friday.

The Fed also noted that “the likelihood of a recession occurring over the next year has fallen noticeably in recent months,” while possible spillovers from the effects of the novel coronavirus have presented a new risk to the US economic outlook, Xinhua reported.

“The FOMC (Federal Open Market Committee) has continued to emphasize that the actual path of monetary policy will depend on the evolution of the economic outlook and risks to the outlook as informed by incoming data,” the report said, referring to the Fed’s policy making committee.

The Fed lowered interest rates three times in 2019, cutting the target range of the federal funds rate by 75 basis points to 1.5-1.75 per cent. After wrapping up its first monetary policy meeting of 2020 last week, the Fed left interest rates unchanged and maintained a wait-and-see stance.