U.S. economy shows only modest signs of inflation pressures: Fed

Wed Apr 19, 2017 2:15pm EDT
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By Lindsay Dunsmuir

WASHINGTON, (Reuters) - The U.S. economy expanded at a modest-to-moderate pace between mid-February and the end of March, but inflation pressures remained in check despite more difficulties in attracting and retaining workers, the Federal

Reserve said on Wednesday.

"On balance, prices rose modestly," the U.S. central bank said in its periodic gauge of the health of the economy derived from surveying business contacts nationwide.

Firms mostly expected price growth to be mild to moderate over the coming months, the Fed added.

It raised its benchmark interest rate in March for the second time in three months and many policymakers appear bullish on the prospects of more tightening this year with the nation near full employment and inflation slowly rising.

That said, there is still debate within the Fed about just how rapid and sustained the pickup in inflation will be given that it has struggled to reach the central bank's 2 percent target over several years.

Elsewhere in the report, most Fed districts said businesses had experienced more difficulty filling low-skilled positions and a larger number of firms said they faced more problems retaining workers.

Employers surveyed by the Fed in recent months have often reported rising wage pressures for specific sectors such as construction and highly-skilled jobs.   Continued...

The U.S. Federal Reserve building in Washington, DC, U.S. on October 12, 2016. REUTERS/Kevin Lamarque/File Photo