The U.S. economic activity has shown a decline, with rising tariffs pushing up costs and prices since the Federal Reserve’s last rate decision, according to the central bank’s latest Beige Book report. The report, compiled from surveys, interviews, and observations across the Fed’s 12 regional banks up to May 23, noted widespread expectations of faster future cost and price increases.
The Fed has kept its policy rate in the current range of 4.25%-4.50% since December and is expected to maintain it for a few more months as officials assess the impact of President Trump’s policies on inflation and the labor market. While government monthly reports have yet to show clear effects, Fed officials emphasize timely data, including business and household experiences captured in the Beige Book, indicating a widespread but uneven tariff impact.
In January, all 12 Fed districts reported economic growth, but the latest report showed only three districts with growth and half reporting declines. Most districts reported flat employment. The Personal Consumption Expenditures Price Index rose just 2.1% in April from a year earlier, the lowest reading in four years and slightly above the Fed’s 2% inflation target.
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