Investing.com – Economic growth in recent weeks expanded at modest to moderate rate across the U.S. central bank’s regional districts, as wage growth and inflation remained sluggish, a Federal Reserve survey showed.
The central bank’s Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through October 6, showed continued weakness in wage growth while price pressures remained moderate, dampening expectations that a tight labor market would spur a rebound in inflation.
“Labor markets were widely described as tight,” according to the report, released Wednesday in Washington. “Despite widespread labor tightness, the majority of Districts reported only modest to moderate wage pressures”.
The most recent reading of the Core Price Consumer Expenditure (PCE) Index – the Fed’s preferred measure of inflation – retreated to 1.3% in September year-on-year. That is well below the Fed's 2% inflation target.
The continued slowdown in inflation has failed, however, to deter policymakers’ tightening stance on monetary policy as Fed chair Janet Yellen recently reaffirmed the Fed’s commitment to raising rates.
"The U.S economy remains strong and the strength of the labor market calls for continued gradual increases in interest rates," Yellen said earlier in the week.
According to investing.com’s Fed rate monitor tool, 91.2% of traders expect the Federal Reserve to hike interest rates in December.
The dollar fell 0.04% to trade at 93.32 while the U.S. 10-Year rose to 2.341, up 1.88%