Fed: Tariffs still concern American manufacturers

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The U.S. Federal Reserve (Fed) said on Wednesday that the nation saw "a modest or moderate pace" of economic growth from mid-October to late November, while tariffs "remained a concern" for U.S. manufacturers.

The "Beige Book," a periodic economic snapshot released by the Fed, contained an economic report from 12 federal reserve districts, which were each monitored by a regional federal reserve bank.

"Optimism has waned in some districts as contacts cited increased uncertainty from impacts of tariffs, rising interest rates, and labor market constraints," the Fed wrote in the report.

Specifically, the Fed report noted that tariffs took a toll on several industries.

"Reports of tariff-induced cost increases have spread more broadly from manufacturers and contractors to retailers and restaurants," the Fed said. The central bank also said agriculture in some districts also noted impacts from tariffs.

Speaking of the employment status and price level, two key factors in monetary policy, the Fed wrote that U.S. labor markets "tightened further" across a broad range of occupations in the United States, while prices rose at a modest pace.

Theoretically, the tight labor market and rising price level could urge Fed officials to continue raising short-term interest rates - of which there have been eight since 2015 - in order to prevent the U.S. economy from overheating.

However, recent remarks made by top Fed policymakers sent more dovish signals about future rate hikes.

On November 28, Fed chairman Jerome Powell said that interest rates remained just below the estimated level of a "neutral" rate which neither speeds up nor slow down economic growth, signaling that some changes could happen to the current trend of rate hikes.

Just one day before Powell's remarks, Fed vice chairman Richard Clarida also underlined the importance of "data dependence" in the policy-making process, as it could give policymakers more flexibility to decide their future moves after a three-year rate hike period.

On September 26, the Fed raised the target range for the federal funds rate to 2-2.25 percent. Another increase is largely expected before the year's end.

Source(s): Xinhua News Agency