(Reuters) – U.S. economic activity was unchanged in July through late August, but firms reported some easing in labor shortages and price pressures, a Federal Reserve report showed on Wednesday.
The U.S. central bank released its latest summary of feedback from business contacts nationwide as it mulls whether to proceed with a third straight 75-basis-point interest rate hike at its Sept. 20-21 policy meeting or go with a still larger-than-usual 50-basis-point rise in its battle to curb high inflation.
“Overall labor market conditions remained tight, although nearly all Districts highlighted some improvement in labor availability,” the Fed said in its survey, known as the “Beige Book,” which was conducted across its 12 districts through Aug. 29. “Price levels remained highly elevated, but nine Districts reported some degree of moderation in their rate of increase.”
Fed Vice Chair Lael Brainard earlier on Wednesday said the central bank would maintain tight monetary policy “for as long as it takes” to get inflation down but did not address the upcoming policy meeting.
Fed Chair Jerome Powell is scheduled to speak at 9:10 a.m. EDT (1310 GMT) on Thursday. A much-anticipated monthly measure of inflation is due on Sept. 13.
The Fed has raised interest rates by 225 basis points since March as it lifts its benchmark overnight interest rate to a level consistent with dampening demand across the economy enough to alleviate price pressures and bring inflation back down to its 2% goal.
Inflation has been running at 40-year highs and more than three times the Fed’s target. While there are some positive recent signs that supply chain issues are improving and tight labor market conditions loosening, policymakers remain fearful higher inflation expectations could become entrenched among businesses and consumers.
They have also flagged rising risks that the aggressive series of rate hikes needed to bring inflation down may cause a recession.
U.S. employers hired more workers than expected in August, the Labor Department reported on Friday in its closely-watched monthly jobs report, but moderate wage growth and a rise in the unemployment rate also suggested labor shortages may be easing.
(Reporting by Lindsay Dunsmuir; Editing by Paul Simao)
