U. S. business expects inflation to slow-Fed survey
2023.03.08 15:18
U. S. business expects inflation to slow-Fed survey
By Ray Johnson
Budrigannews.com – In a report released on Wednesday, the Federal Reserve stated that although businesses reported a moderation in inflation that they expect to continue this year, U.S. economic activity increased slightly from January to the end of February and price increases remained widespread.
A day after Fed Chair Jerome Powell stated that policymakers may have to raise interest rates higher and possibly at a faster pace than anticipated due to recent stronger-than-expected readings on the labor market, consumer spending, and inflation, the U.S. central bank released its latest temperature check on the state of the economy.
In an effort to reduce overall economic demand and bring inflation back down to its target of 2%, the Federal Reserve raised interest rates the previous year at the quickest rate in 40 years. However, the economy has since recovered and price increases have reaccelerated after a period of softening toward the end of last year.
The Fed stated in the survey, dubbed the “Beige Book,” that “overall economic activity increased slightly in early 2023.” The survey was carried out in each of the Fed’s twelve districts through February 27. Contacts did not anticipate a significant improvement in economic conditions in the months to come, despite the increased uncertainty.”
In an effort to reduce price pressures without sending the economy into a recession, Fed policymakers have been paying close attention to feedback from business contacts all over the country. At the moment, the benchmark overnight interest rate set by the Fed is between 4.50% and 4.75 percent.
In addition, the report noted that although price increases moderated in many of the Fed’s regional districts, inflation pressures remained widespread.
According to the report, “Contacts expected price increases to continue to moderate over the year”
Inflation reached its highest monthly increase since June 2022 in January, according to the Fed’s preferred measure, which was running at a rate of 5.4% annually.
Making the Federal Reserve’s undertaking considerably more troublesome, work acquires flooded in January and the joblessness rate tumbled to the least perusing starting around 1969. The Fed’s policymakers have made it clear that wage pressures won’t go down unless there is less of a shortage of workers in the labor market.
The U.S. Department of Labor reported earlier on Wednesday that job openings decreased less in January than anticipated and that data for the previous month were revised higher, indicating that the labor market remains tight.
Friday will see the release of the Labor Department’s highly anticipated employment report for February.
