The US Federal Reserve on Wednesday said business contacts in many regions of the US are expressing less optimism amid a host of adverse developments, from plunging stock prices to uncertainty about a widening trade dispute.
In its latest report on economic conditions around the country, the Fed said that eight of its 12 regions reported the economy was expanding at a moderate pace as the new year began.
While the outlook remained generally positive, the report said that business executives had grown more worried about “increased financial market volatility, rising short-term interest rates, falling energy prices and elevated trade and political uncertainty.”
The report, known as the Beige Book, says a few districts experienced a slowdown in economic activity.
Information from the report will be used when Fed officials meet next on Jan. 29 and Jan. 30.
The Fed boosted the rate four times last year, with the last quarter-point increase coming last month. At the time, officials signaled that it would increase rates twice more this year.
Those rate hikes have been attacked by US President Donald Trump, who has charged that the central bank represented his “biggest threat,” because they ran the risk of crashing the stock market and sparking a recession.
US Federal Reserve Chairman Jerome Powell and other Fed officials have stressed recently that low inflation levels will allow them to be “patient” in deciding how much more to raise interest rates.
Federal Reserve Bank of Kansas City President Esther George, one of the Fed’s leading supporters of higher rates, on Tuesday said she believed the Fed could delay further rate hikes for a time.
“A pause in the normalization process would give us time to assess if the economy is responding as expected with a slowing of growth to a pace that is sustainable over the longer run,” George said in a speech in Kansas City.
The Beige Book found that labor shortages were among the biggest issues facing employers, reflecting unemployment that has fallen close to a 50-year low.
While wages are up, the report said the gains have remained “moderate” with overall inflation also remaining moderate.
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