(Bloomberg) -- The Federal Reserve said the US economy grew only slightly through late November, with businesses reporting that high inflation and rising interest rates clouded their view of the economic outlook.

“Economic activity was about flat or up slightly since the previous report, down from the modest average pace of growth,” the Fed said Wednesday in its Beige Book report, published two weeks before each meeting of the policy-setting Federal Open Market Committee. 

“Interest rates and inflation continued to weigh on activity, and many contacts expressed greater uncertainty or increased pessimism concerning the outlook.”

The report was based on anecdotal information collected by the Fed’s 12 regional banks through Nov. 23 and compiled by the Boston Fed.

The Fed has been raising interest rates aggressively to try to cool demand and bring down inflation that has remained near a 40-year high. Chair Jerome Powell, speaking at an event Wednesday, echoed his colleagues’ recent comments that the central bank will likely downshift to a 50 basis-point hike at their final meeting of the year, but officials could also raise their forecasts for how high rates will go.

Read more: Powell Signals Downshift Likely Next Month, More Hikes to Come

“Five Districts reported slight or modest gains in activity, and the rest experienced either no change or slight-to-modest declines,” the report found. “Employment grew modestly in most districts,” though the labor market was still described as tight.

While the Fed has sought to reduce US growth to below trend as a way to douse inflationary pressures and cool a labor market they view as overheated, the economy has remained largely resilient. Policymakers will get the latest read on employment on Friday, with forecasters looking for payroll additions of around 200,000 and the unemployment rate expected to stay at 3.7%.

Recent economic data has suggested some pickup in the economy, with the Atlanta Fed’s tracking estimate of fourth-quarter gross domestic product giving an early forecast of growth of 4.3% as of Nov. 23. A report earlier Wednesday showed the government’s primary measures of economic activity painted a mixed third-quarter picture of the economy’s momentum after a lackluster first half of the year.

Inflation has showed some signs of slowing in recent months, but still remains extremely elevated. The October personal consumption expenditures price index, which the Fed uses for its inflation target, will be released Thursday.

“Consumer prices rose at a moderate or strong pace in most Districts,” the report said. “Still, the pace of price increases slowed on balance, reflecting a combination of improvements in supply chains and weakening demand.”

Read more: Fed to Get Some Help in Pausing as CPI-PCE Inflation Gap Shrinks

The report also found wage pressures may be easing in some areas, with some businesses optimistic that would continue.

“Opinions about the outlook pointed to stable or slowing employment growth and at least modest further wage growth moving forward,” the report found.

Minutes from the Fed’s policy meeting earlier this month gathering showed widespread support among officials for calibrating their moves, with a “substantial majority” agreeing it would soon time to slow the pace of rate increases. Even so, “various” policymakers wanted rate hikes to go somewhat higher than they had previously expected.

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