(Bloomberg) -- Federal Reserve policymakers again vowed to deliver price stability even as inflation remains well above the central bank's 2% target, making the pledge in the central bank's semiannual Monetary Policy Report to Congress that was released Friday in Washington.
The report, the first under new Fed Chairman Kevin Warsh, sent an upbeat message on the economy. It described growth as solid and productivity as strong, while finding little sign of risk in the banking system. The report noted that inflation had moved higher over the past year due to the impact of the Iran war, tariffs and soaring costs for technology goods. But it also highlighted that other inflation gauges, including a so-called trimmed-mean measure of price gains, had declined over the past year.
That observation is in line with Warsh's previously stated view that policy makers need to widen their lens on inflation metrics to get a better handle on price pressures. Warsh has set up five task forces led by external experts, including one to explore inflation frameworks. They are due to report back to policymakers by year end.
"Price stability is essential for a sound and stable economy and supports the well-being of all Americans," the report said. "The Committee is prepared to act forcefully to ensure that longer-term inflation expectations remain well anchored."
Warsh will testify on Capitol Hill over two days next week, beginning with an appearance before the House Financial Services Committee on Tuesday at 10 a.m.
In a nod to how the artificial intelligence boom is impacting the economy, the Fed's report noted that business adoption of new technology may be boosting productivity. But it also highlighted a surge in consumer prices this year for computers, electronics and software that reflects new demand for semiconductors and other material linked to the AI build-out.
The report also includes analysis of Fed policymakers' forecasting records, which found those outlooks are clouded by uncertainty — a conclusion that gels with Warsh's call to cut back on forward guidance.
On the balance sheet, having sustained operating losses since late 2022 the Fed said its consolidated deferred assets - a term for the cumulative value of its operating losses - had fallen by $7 billion since early January to around $236 billion. Reserve Banks that no longer have accumulated losses collectively remitted around $6 billion to the US Treasury, the report added. Earlier this year, the New York Fed reported the overall system could return a positive net income in 2026.
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