Beige Book Suggests Modest Growth Amid Ongoing Inflation Worries

The US economic activity has increased modestly in recent weeks, according to the Federal Reserve's latest Beige Book. The report, based on information collected through August 24 from the Fed's 12 regional districts, shows a mixed picture ahead of its September 15-16 policy meeting.

Price increases slowed in three Fed districts, accelerated in one and were unchanged in eight. Businesses across several regions reported higher costs for energy, transportation, and raw materials. Tariff-related pressures and rising healthcare and insurance costs also remain concerns.

The inflation rate has remained above the Fed's 2% target for more than five years, keeping price pressures at the center of the policy debate. The Fed kept its benchmark interest rate at 3.50%-3.75% at its July meeting, where it has remained since December.

Policymakers remain divided over whether inflation has eased enough to justify keeping rates unchanged. Financial markets are pricing about a 65% probability of a rate hike at the September meeting, compared with a 35% chance of a hold.