(Bloomberg) -- The U.S. economy grew at a moderate pace through mid-April and inflationary pressures remained strong, but rising prices and geopolitical developments created clouded the outlook for future growth, the Federal Reserve said.
“Inflationary pressures remained strong since the last report, with firms continuing to pass swiftly rising input costs through to customers,” the U.S. central bank said in its Beige Book survey released Wednesday. “Outlooks for future growth were clouded by the uncertainty created by recent geopolitical developments and rising prices.”
The report was based on anecdotes collected by the Fed’s 12 regional banks through April 11 and compiled by the Federal Reserve Bank of Minneapolis.
The Fed raised interest rates last month for the first time since 2018 and officials have said they will move “expeditiously” to lift them back to a “neutral” level that neither stimulates nor slows the economy. Policy makers are debating whether they will need to raise rates above neutral -- estimated to lie around 2.4%-- and by how much, as they battle the highest inflation in four decades.
A number of Fed officials have said they are open to delivering a 50-basis-point increase when they meet in May, a move that is fully priced into money markets. St. Louis President James Bullard on Monday said a 75-basis-point move should not be ruled out if needed, although it wasn’t his base case.
U.S. central bankers say they can slow price increases without causing a downturn, but that goal may be more difficult if supply chain disruptions caused by the pandemic persist.
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