US firms optimistic about growth in 2017: Federal Reserve
The U.S. Federal Reserve says most American businesses are optimistic about growth in 2017.
Speaking following the release of the Fed's Beige Book on Wednesday, Janet Yellen hinted at more rate hikes down the line, but stressed increases must be gradual and timely in order to avoid a recession.
Ro Aram has more.
The Beige Book economic report showed the U.S. economy grew a bit faster at the end of last year, spurred by healthier sales for manufacturers and steady hiring that is slowly pushing up wages.
The report also said most American firms across industries were optimistic about growth this year.
Most of the Fed's twelve districts also expected the labor market to tighten in 2017, with wage pressures likely to rise and the pace of hiring to hold steady or increase.
Although a couple of districts mentioned layoffs for last year, net employment across the board was up.
The central bank also wrote that pricing pressures have somewhat intensified, adding to confidence that inflation will continue to edge towards the Fed's two percent target.
These rosy outlooks were echoed by Fed chair Janet Yellen.
Speaking at the Commonwealth Club in San Francisco on Wednesday, Yellen said the central bank is close to meeting its goals of maximum employment and price stability.
She also said it "makes sense" for interest rates to be gradually increased, but stressed that the timing of rate hikes was important.
The Beige Book and Yellen's comments come two days before U.S. President-elect Donald Trump's inauguration.
The Fed chair and the incoming president could be on a collision course in terms of fiscal policy as Trump's plans to spend big on infrastructure could push inflation higher.
This runs counter to the Fed's goals and may force the central bank to raise rates faster, which it wants to avoid.