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Fed's Beige Book Indicates Modest Economic Expansion

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Economic activity in the U.S. expanded at a modest pace overall from April through mid-May, according to the Federal Reserve's Beige Book released on Wednesday.

The Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts, noted the assessment of the overall economy reflected a slight improvement over the slight-to-moderate growth indicated in the previous report.

The Fed said almost all districts reported some growth, with a few districts reporting moderate gains in economic activity.

Manufacturing reports were described as generally positive, although the Fed highlighted uncertainty about the impact of trade negotiations and tariffs.

Reports on consumer spending were generally positive but tempered, the central bank said, while agricultural conditions remained weak overall.

The assessment of the labor market was similar to the previous report, with most districts reporting modest or moderate job growth and others reporting slight growth,

On the inflation front, the Beige Book said overall prices continued to increase at a modest pace in most districts since the previous report.

Several Districts noted faster growth in input prices than in final selling prices, although firms generally reported input cost increases in the modest-to-moderate range.

Looking ahead, the Fed said outlook for the coming months was solidly positive but modest, with little variation among reporting districts.

The release of the Beige Book comes two weeks ahead of the Fed's next monetary policy meeting scheduled for June 18th and 19th.

Recent comments from Fed officials have suggested the central bank could begin discussing potentially lowering interest rates at the meeting, but CME Group's Fed Watch Tool currently indicates a 75.8 percent chance rates will remain unchanged.

Meanwhile, the chances of a rate cut at the July or September meetings have increased after Fed Chairman Jerome Powell pledged to act "as appropriate" to sustain the economic expansion amid headwinds from escalating global trade tensions.

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