Fed describes labor market as strong, weak inflation as 'transitory'

WASHINGTON: U.S. economic growth continued"at a solid pace" in the first half of the year though it likely weakened in recent months as higher tariffs depressed global trade and business investment weakened, the Federal Reserve said on Friday in its semi-annual report to Congress.

The tariffs imposed by the United States and some of its trading partners, combined with the uncertainty around trade policy were likely"material" in the sharp slowdown in global manufacturing growth last year, the Fed said in a separate section in the report on global manufacturing. U.S. businesses added 224,000 new jobs last month, the Labor Department reported earlier on Friday, an outcome that led bond investors to increase their bets the Fed would only reduce rates by a quarter of a percentage point at its policy meeting this month.Fed Chairman Jerome Powell will appear before Congress next week for his semi-annual testimony on the state of the economy and is likely to elaborate on whether he feels the latest economic data justifies a rate cut that many now expect.

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