The US Federal Reserve's latest Beige Book reveals a cautiously pessimistic economic outlook, with businesses nationwide grappling with rising costs linked to import tariffs and delayed hiring plans. While economic activity showed modest growth in recent weeks, the report underscores mounting concerns over inflationary pressures and policy uncertainty.
Industries ranging from manufacturing to retail anticipate sustained cost increases, potentially accelerating consumer price hikes by late summer. Employment growth remained sluggish, with many firms postponing hiring or layoff decisions amid trade tensions and immigration policy impacts.
Federal Reserve officials appear divided on monetary policy responses. Boston Fed President Susan Collins emphasized patience, stating current data doesn't warrant immediate rate changes. Dallas Fed President Lorie Logan suggested maintaining rates to counter tariff-driven inflation risks. This comes as President Trump renewed criticism of Fed Chair Jerome Powell, though he denied plans to remove him from office.
Market analysts note an emerging split within the Fed, with some policymakers considering preemptive rate cuts at July's meeting to support employment, while others prioritize containing inflation expectations. The central bank continues balancing strong labor market indicators against rising unemployment claims and slowing job growth.
