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The U.S. economy grew at a modest to moderate pace through mid-November while price hikes were widespread amid supply chain disruptions and labor shortages, the Federal Reserve said.
“Prices rose at a moderate to robust pace, with price hikes widespread across sectors of the economy,” the U.S. central bank said in its Beige Book survey released Dec. 1. “There were wide-ranging input cost increases stemming from strong demand for raw materials, logistical challenges and labor-market tightness.”
The report was based on anecdotal information collected by the Fed’s 12 regional banks through Nov. 19 and compiled by the Federal Reserve Bank of Chicago.
“The outlook for overall activity remained positive in most districts, but some noted uncertainty about when supply chain and labor supply challenges would ease,” the Fed said.
Higher and more persistent inflation has led the Fed to consider speeding up how quickly they withdraw pandemic-related monetary policy support.
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The U.S. central bank is set to phase out its bond-buying program in mid-2022 under a plan announced at the start of November to slow purchases by $15 billion a month. The policy-setting Federal Open Market Committee will meet again in mid-December, when they could make a decision to accelerate the pace of tapering.
Fed Chair Jerome Powell said Dec. 1 that “it’s appropriate that we consider at the next meeting tapering faster so that it wraps up a few months earlier.”
“We’ve seen inflation be more persistent. We’ve seen the factors that are causing higher inflation to be more persistent,” Powell told the House Financial Services Committee. “Policy has adapted to that and will continue to adapt.”
The report said that leisure and hospitality activity “picked up in most districts as the spread of the delta variant ebbed in many areas.” But the results from the Beige Book only reflect information through mid-November, before the emergence of the omicron variant, which could threaten the recovery of the services sector in the coming months.
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