The pace of the U.S. recovery picked up somewhat in April and May, the Federal Reserve said, though price pressures mounted.

“The national economy expanded at a moderate pace from early April to late May, a somewhat faster rate than the prior reporting period,” the U.S. central bank said in its Beige Book survey released on Wednesday. “Overall price pressures increased further since the last report. Selling prices increased moderately, while input costs rose more briskly.”

The report was based on information collected by the Fed’s 12 regional banks on or before May 25.

Fed officials are considering how quickly to trim monetary policy support with an increased pace of vaccinations brightening the U.S. outlook. The Federal Open Market Committee will update its quarterly forecasts for interest rates, growth, unemployment and inflation at its June 15-16 gathering.

Pricing power

The Beige Book reported that some businesses were able to take advantage of stronger demand to pass along higher input costs to customers.

“Looking forward, contacts anticipate facing cost increases and charging higher prices in coming months,” the survey said.

Several policy makers including Vice Chair Richard Clarida have said central bankers may be able to begin discussing the appropriate timing of scaling back their bond-buying program at upcoming policy meetings. Patrick Harker, president of the Philadelphia Fed, said earlier on Wednesday that officials should get that debate underway.

The FOMC has committed to only begin scaling back the US$120 billion monthly pace of its asset purchases after there’s “substantial further progress” on inflation and employment.

U.S. central bankers will get a fresh update on the status of the labor market on Friday. The May employment report is expected to show the addition of 653,000 new jobs, with the unemployment rate dropping to 5.9 per cent, according to a Bloomberg survey of economists.

U.S. consumer prices showed hotter-than-expected inflationary pressures in April. Fed officials have largely written them off as owing to transitory factors associated with supply-chain bottlenecks and the reopening of service industries as the pandemic recedes.

The Fed’s forecasts released in March showed officials don’t expect to raise interest rates from near zero before the end of 2023, even as they sharply upgraded projections for growth and employment this year.