Economic activity in the US picked up in recent weeks, but the outlook was "neutral to slightly pessimistic" as businesses reported higher import tariffs were putting upward pressure on prices, according to the Fed's Beige Book released on Wednesday.

A wide range of industries expect cost pressures to remain elevated in the coming months, increasing the likelihood that consumer prices will start to rise more rapidly by late summer. 

Employment was reported to have increased very slightly, the US Fed said, adding "many contacts expected to postpone major hiring and layoff decisions until uncertainty diminished." Immigration enforcement and deportations, which are a key pillar of US President Donald Trump's policy framework, also appeared to hurt businesses in a number of regions.

On Tuesday, Dallas Federal Reserve Bank President Lorie Logan said the US central bank will probably need to leave interest rates where they are for a while longer to ensure inflation stays low in the face of upward pressure from the Trump administration's tariffs.

Boston Federal Reserve President Susan Collins said she's in no rush to change the US central bank's benchmark interest rate amid current economic uncertainty, as data suggests that while import tariffs will drive up inflation, it's possible the overall impact may not be as bad as once feared.

US President Trump has repeatedly criticized Fed Chair Jerome Powell and demanded the central bank cut rates immediately. Bloomberg reported earlier on Wednesday that Trump is likely to fire Powell, but Trump later told reporters he was not planning to do so even as he unleashed a fresh round of criticism of Powell's stewardship and declined to completely reject the possibility of ousting him.

A couple of Fed policymakers have said they'd consider cutting rates as soon as the July 29-30 meeting to head off any further labor market weakening.

Most US central bankers, however, believe the job market remains solid despite some signs of cooling, like a recent rise in continuing unemployment claims and a slowdown in job growth, and are unwilling to lower rates when they expect that the highest import duties in decades will drive up prices in coming months and potentially undo hard-won progress on inflation.

(With input from Reuters)