Fed downplays impact from rise in oil prices

Economy 7/13/2018, 5:13 PM
Fed downplays impact from rise in oil prices

In the first half of 2018, the economy of the United States has "solid" growth, the Federal Reserve said on Friday and reiterated its determination to maintain a gradual approach in raising interest rates. The expansion "stepped up in the second quarter," the central bank added in its semiannual report to Congress, scheduled to be presented by Chair Jerome Powell next week. The document indicates the past year of "rapidly" growing prices of oil are detrimental to future household consumption, but adds the net effect is now "much less of a net overall drag on the economy" than earlier.

The Fed explained the negative effect on the gross domestic product should be "offset by increased production and investment in the growing US oil sector" but acknowledged the continuous and "important distributional" impact. The headwinds "should get smaller still as US oil production grows and net oil imports decline further," policymakers asserted.

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