US economic activity grew slightly, prices continued to rise and employment levels remained stable in recent weeks, The Federal Reserve reported in a report on Wednesday.
The report could leave central bank policymakers baffled about the trajectory of inflation, as they prepare for their next monetary policy meeting in two weeks.
“Overall, economic expectations were optimistic, with most (Fed) districts expecting mild to moderate growth in the coming months,” the US central bank said. in its latest “Beige Book,” a summary of qualitative economic data from across the country that includes surveys and interviews with business leaders and community organizations.
“Ultimately, companies expected prices to rise at a somewhat slower pace in the short term,” according to the report. which is designed to give Fed policymakers a detailed view of the health of the economy ahead of their interest rate-setting meetings.
The information in the latest report was collected through February 23, just after the Supreme Court invalidated many of President Donald Trump’s global tariffs and before the start of the US and Israel’s war against Iran.
The Fed kept its benchmark overnight interest rate stable in the range of 3.50% to 3.75% at its meeting on January 27 and 28, citing labor market stabilization and persistently high inflation as reasons to pause the series of interest rate cuts of the last three meetings of 2025.
With data since then showing steady growth in the manufacturing sector, an increase in wholesale prices in January, and no obvious deterioration in the labor market, The central bank is expected to keep rates unchanged at its March 17-18 meeting.
The conflict in Iran could cause the central bank to keep rates unchanged for longer due to inflation concerns.
Businesses and households in all 12 Fed regions continue to grapple with rising prices as a result of tariffs imposed by the Trump Administration, according to the Beige Book.
However, according to the report, “most districts received reports that some companies were keeping sales prices stable despite rising costs, as their customers were increasingly price sensitive.
