Fed survey finds moderate economic growth in spring

Fischer says rate hikes unlikely to roil world markets

WASHINGTON, April 20, (Agencies): The Federal Reserve said Wednesday the US economy kept expanding in the early spring, with tight labor markets and many businesses reporting rising wages.

In its latest survey of economic conditions nationwide, the central bank found that it’s 12 regional banks all depicted growth as either “modest or moderate” from mid-March through early April. The strength came from consumer spending, tourism, housing construction and manufacturing.

The report said businesses reported tight labor markets with more job turnover and bigger wage increases for workers whose skills were in short supply.

The Fed’s survey, known as the Beige Book, will be used when Fed officials next meet on May 2-3. The Fed raised rates by a quarter-point in December and March, but analysts are not expecting a rate hike in May.

The Fed is continuing to project three rate hikes this year. Officials say they are close to achieving their goals of maximum employment and inflation rising at an annual rate of 2 percent.

As the global recovery has taken firmer hold, gradual US interest rate increases are unlikely to roil world markets or cause undue problems for policymakers, a top Federal Reserve official said Wednesday.

And as the US central bank continues to raise the benchmark lending rate, it will be seen as a sign of confidence in the US and global economies, Fed Vice-Chair Stanley Fischer said in a speech.

Speaking to a central banking conference ahead of the International Monetary Fund’s semi-annual meeting, he repeated the Fed’s oft-stated view that rate hikes will be gradual, given current forecasts of the economy and inflation.

That pace “seems likely both to maximize the prospects of a continued expansion in the US economy and to mitigate the risk of undesirable spillovers abroad,” he said.