U.S. economic activity expanded slightly from late February to early April and there were fears among businesses that progress in reducing inflation would stall, a Federal Reserve (Fed) survey showed Wednesday, continuing with recent trends that have prevented the central bank from cutting interest rates.
The U.S. central bank released its latest view on the health of the economy a day after Fed Chair Jerome Powell backed away from earlier guidance on when its benchmark interest rate could be cut and, Instead, he said monetary policy needs to be tight for longer due to a series of stronger-than-expected inflation readings.
“General economic activity expanded slightly. “Ten of the twelve districts experienced slight or modest economic growth,” the Fed reported in the survey known as “Beige Book,” which polled business contacts across the central bank’s 12 districts through April 8. “The economic outlook among contacts was cautiously optimistic, on balance.”
Until the turn of the year, Powell and his colleagues had been encouraged by data showing inflation, which in 2022 soared to a 40-year high, was drifting toward the Fed’s 2 percent target rate, even amid strong economic growth and a low unemployment rate.
However, that momentum has stalled and even reversed, casting doubt on whether the Fed, which in March had provisionally forecast three rate cuts this year, will be able to reduce its official interest rate in the coming months. Investors are only expecting a first cut in September, and the chances of a second are increasingly lower.
#economic #activity #grew #slightly #weeks #Fed
– 2024-04-25 20:58:07
