The Fed's Beige Book report said the outlook for businesses was bleak due to weakening demand and fears of a recession, but inflation was gradually moderating.

(Reuters file photo)

[Financial Channel/Comprehensive Report] The U.S. Federal Reserve (Fed) said on Wednesday (19th) that U.S. economic activity has expanded moderately in recent weeks, and the report shows that due to weakening demand and fears of a recession, companies are optimistic about future growth. The outlook is increasingly pessimistic, but inflationary pressures are easing.

"Reuters" reported that the Fed's Beige Book pointed out that inflation pressures have eased and are expected to continue to moderate, which also indicates that the Fed's aggressive interest rate hikes may successfully reverse the trend of the highest inflation in 40 years. .

Some noted that pricing power has stabilized over the past six weeks, while others said cost-passing has become more difficult, and looking ahead, price increases are expected to be generally moderate, according to a report compiled as of Thursday.

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The Beige Book, released on Wednesday, contrasts sharply with the previous report in late summer, which said most respondents expected price pressures to continue at least through the end of the year.

In order to ease price pressures, the Fed continued to raise its benchmark interest rate. The current view of slowing inflation is accompanied by concerns about economic costs brought about by interest rate hikes, and demand is now generally seen as weak.

The outlook has become more pessimistic amid growing concerns about weakening demand, the Fed said.

The Fed is hawkishly tightening policy, but U.S. inflation is still more than three times the central bank's 2% target, so this report may not help to moderate the Fed's next rate hike of 3 yards (0.75 percentage points) at its November meeting ) expectations.

Policymakers have said they will keep raising interest rates until they see cooling inflation, although they have conceded that higher borrowing costs could lead to the possibility of slower growth, a weaker labor market and higher unemployment.

Higher prices and interest rates are also constraining demand, not only in housing, but also on auto demand, the Cleveland Federal Reserve Bank said in a report.

Auto dealers reported that sales were flat or falling, with consumers becoming more cautious due to higher interest rates and higher vehicle prices.

The Federal Reserve Bank of Philadelphia said that respondents described high expectations for a recession, with companies stepping up their preparations for a recession, with several companies suspending hiring and others starting to plan to conduct a recession if business conditions do not improve. Layoffs, 1 company also noted widespread layoffs already underway in the industry.

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