Fed Flags Uncertainty Amid Modest Economic Growth

The US Federal Reserve has reported that despite a generally positive economic outlook in the country, there is growing uncertainty due to high energy prices and policy issues. In its 'beige book' survey of economic conditions, the Fed noted that economic activity nationwide increased modestly since early July.

However, high inflation has resulted in significant price sensitivity for consumers, with low-income households reducing spending while higher-income household consumption continues to grow. This trend is often referred to as the 'K-shaped' economy.

The report comes ahead of a meeting of the Fed's rate-setting committee in mid-September, when markets expect the central bank to raise interest rates to combat sustained inflation. The Fed has missed its long-term two-percent target for inflation for more than five years, and US households have been battered by high prices.