Investing.com – Economic growth in recent weeks expanded at modest to moderate rate across the U.S. central bank’s regional districts, amid ongoing wage growth while the inflation outlook improved, a Federal Reserve survey showed.
The central bank’s Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through November 17, showed wage growth continued to improve, while price pressures strengthened, rising expectations that the trend of slowing inflation was beginning to fade.
“Economic activity continued to increase at a modest to moderate pace in October and mid-November, according to anecdotal reports from contacts across the 12 Federal Reserve Districts,” according to the report released Wednesday in Washington. "Price pressures have strengthened since the last report. Most Districts reported modest to moderate growth in selling prices and moderate increases in non-labor input costs."
The improved outlook on inflation comes as the most recent reading of the Core Price Consumer Expenditure (PCE) Index – the Fed’s preferred measure of inflation – retreated to 1.3% in September on year-on-year.
Federal Reserve chair Janet Yellen recently described the trend of slowing inflation as “dangerous” warning that low inflation limits the potential of further rate hikes, diminishing the Federal Reserve’s ability to respond the subsequent crises.
“It can be quite dangerous to allow inflation to drift down and not to achieve over time a central bank’s inflation target,” Yellen said last week.
Markets appear to have fully priced in a December rate hike as 100% of traders expect the Federal Reserve to raise rates for third time this year at its Dec. 12-13 meeting.