Fed Beige Book: Mideast conflict uncertainty puts businesses on hold

Economic activity across most of the U.S. continued to grow slightly to modestly, but the war in Iran has introduced new uncertainty and higher energy costs, the Federal Reserve said in its Beige Book released on April 15. The Fed noted that while overall price increases remained moderate, energy and fuel costs rose noticeably across all 12 Federal Reserve districts. The central bank reported that the Middle East conflict was seen as a major source of uncertainty, complicating business decisions on hiring, pricing, and capital investment, and leading many firms to adopt a wait-and-see approach. The report, compiled by the New York Federal Reserve Bank, reflects data through April 6 and captures the initial economic impact of the war. The oil price shock from the conflict has pushed up gasoline prices, contributing to the largest increase in U.S. inflation in March since 2022. Many Fed policymakers have signaled they are leaning toward holding interest rates steady for a significant period to evaluate incoming economic data.