Fed says economy growing at moderate pace
WASHINGTON (Reuters) - The economy posted a moderate pace of growth between late February and early April, the Federal Reserve said on Wednesday, supported by rising home prices and stronger factory activity.
The account by the Fed's 12 regional banks was a bit more upbeat than the previous Beige Book survey, with Dallas and New York noting a slight acceleration in the pace of expansion, while five saw growth as moderate, and the other five as modest.
"Reports from the 12 Federal Reserve districts suggest overall economic activity expanded at a moderate pace during the reporting period from late February to early April," the Fed said, summarizing the anecdotal findings of the 12 banks.
The Fed voted last month to maintain bond purchases at a $85 billion monthly pace, and to hold interest rates near zero until unemployment hit 6.5 percent, provided inflation remained under 2.5 percent. The jobless rate in March was 7.6 percent.
Critics say the massive asset purchases risks stoking future inflation, but the Fed saw no such signs.
"Aside from reports of increases in home prices and residential construction materials, price pressures remained mostly subdued across Districts," it said.
The Beige Book, which draws on the extensive contacts maintained by regional Fed banks with their local business communities, was prepared in this instance by the Dallas Fed, on the basis of information collected on or before April 5.
Financial markets have been buffeted by fears of a 'spring swoon' in growth after a disappointing March jobs report and other softer readings from factories and retail sales.
However, in cautiously optimistic language, the central bank detailed progress in key parts of the economy, with manufacturing advancing, especially in sectors linked to autos and construction.
"Most districts said residential and commercial real estate improved markedly since the last report. Home prices were rising in many areas of the country. Loan demand was steady to slightly up in most districts," the Fed said.
The Fed has held rates near zero since late 2008 and has tripled its balance sheet, to around $3 trillion, in a bold bid to curb high long-term unemployment, which threatens to do lasting damage to the country's potential growth. The jobs picture did not show much sign of brightening.
"Employment conditions remained unchanged or improved somewhat, and reports of hiring were most prevalent in the manufacturing, residential construction, information technology, and professional services sectors. Wage pressures were generally contained," the Fed said.
(Reporting By Alister Bull, Editing by Neil Stempleman)