US Economic Activity Expanded Slightly in Recent Weeks

• The latest Federal Reserve survey shows a slight expansion in US economic activity from late February to early April. Firms anticipate stable inflation, hindering the central bank from lowering interest rates.
• Fed Chair Jerome Powell now suggests a longer period of restrictive monetary policy due to consistently stronger-than-expected inflation data.
• Recent data challenges the positive trend Powell and colleagues relied on. Despite signs of inflation decreasing towards the Fed's 2% target, momentum has stalled, raising doubts about implementing the three planned rate cuts this year. Investors now anticipate the first cut in September, with dwindling odds for a second.
• According to the "Beige Book" survey, ten out of twelve districts experienced slight or modest economic growth, with a cautiously optimistic outlook among business contacts.
• While overall price increases were modest, some districts noted moderate energy price hikes, with manufacturers foreseeing potential upside risks in input and output prices. Firms expect inflation to remain slow, but their ability to pass on cost increases to consumers has weakened.
• The Fed is likely to maintain its current policy rate range, with slight increases in inflation and modest employment growth. Certain positions still face persistent shortages of qualified applicants, though wage growth rates have returned to historical averages in some areas.

(Source: Reuters)