Summary
- The Fed’s Beige Book said the Middle East war and the war involving Iran have reinforced a wait-and-see stance among businesses.
- It said energy and fuel costs rose noticeably across all 12 Fed districts, adding to higher oil prices and inflation pressure.
- Within the Fed, support is building to keep interest rates on hold for the time being in response to the uncertainty, and policy will be shaped by geopolitical risks and inflation trends.
Forecast Trend Report by Period
The Federal Reserve said growing uncertainty tied to the war in the Middle East is prompting businesses to take a more cautious stance. Rising energy costs were also cited as a key factor.
The Beige Book, released on April 15, showed economic activity across most parts of the US expanded at a modest or slight pace.
The Fed said the war involving Iran had introduced a new source of uncertainty. Energy and fuel costs rose “noticeably” across all 12 Federal Reserve districts.
“The conflict in the Middle East has become a major source of uncertainty, complicating companies’ decisions on hiring, pricing and capital spending,” the report said. As a result, many businesses have adopted a wait-and-see approach.
The report reflects data collected through April 6 and captures the early effects of the war on the US economy. Rising oil prices pushed up gasoline costs and contributed to inflation pressures in March.
Within the Fed, support is building for keeping interest rates unchanged for now in light of the uncertainty. Future policy decisions will hinge on geopolitical risks and the path of inflation.
JH Kim
reporter1@bloomingbit.ioHi, I'm a Bloomingbit reporter, bringing you the latest cryptocurrency news.
