By Meredith, Robyn
American Banker , Vol. 159, No. 47
WASHINGTON -- Despite moderate economic expansion the first two months of the year, inflationary pressures are limited, the Federal Reserve said Wednesday.
"Overall, only limited price pressures are reported," the central bank said in the Beige Book, its periodic survey of regional economic conditions.
"Prices of building materials, selected metals, and some chemicals are not experiencing upward pressure," the Fed said.
Consumer Spending Slows
Record cold weather in the East and Midwest temporarily chilled construction and consumer spending but boosted some tourism and energy markets. Merchants in most regions expect solid sales growth in the next few months, the Fed said.
The Beige Book "paints a picture of an economy that is hitting on almost all cylinders," said Paul L. Kasriel, an economist at Chicago-based Northern Trust Co. "While there is no meaningful increase in inflation now, perhaps the seeds for moderately higher inflation have been sown."
Although rising interest rates have slowed mortgage refinancing in several districts, demand for home and business loans have generally picked up, and durable goods are selling briskyl nationwide, the Fed said.
Interest Rate Cycle
"We have passed the bottom of the interest rate cycle," said James H. Chessen, chief economist at the American Bankers Association. "That severely wounds the refinance industry."
Loan demand is stronger in the Kansas City, Atlanta, and Dollas districts.
Business loans have shown the greatest strength, particularly in New York, Richmond, Cleveland, Kansas City, and Washington State.
The Fed's 12 district banks prepare the Beige Book every six weeks, in anticipation of Federal Open Market Committee meetings. …