Fed Semi annual testimony, positive description of US labour market

The description of recent developments in the labour market and growth in general was also positive, although 'indicators suggest that there is still some slack in the labour market'. On inflation, the Fed also seems only moderately worried about the low level of inflation 'to a significant extent, the recent low readings on total PCE inflation reflect influences that are likely to be transitory, particularly the earlier steep declines in oil prices and in the prices of non-energy imported goods'.

On the outlook, 'prospects are favourable for further improvement in the US labour market and the economy more broadly' and risks were described as two-sided. 'As always, however, there are some uncertainties in the economic outlook. Foreign developments, in particular, pose some risks to US growth. 

Most notably, although the recovery in the euro area appears to have gained a firmer footing, the situation in Greece remains difficult and China continues to grapple with the challenges posed by high debt, weak property markets and volatile financial conditions. 

But economic growth abroad could also pick up more quickly than observers generally anticipate, providing additional support for US economic activity. The US economy also might snap back more quickly, as the transitory influences holding down first-half growth fade and the boost to consumer spending from low oil prices shows through more definitively, says Danske Bank.