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Wednesday, September 22, 1999 Published at 18:53 GMT 19:53 UK

Business: The Economy

'Beige Book' eases US interest rate fears

The Federal Reserve publishes its Beige Book eight times a year

Inflation worries ahead of next month's US interest rate meeting will have been partially eased by the Federal Reserve's latest survey of US economic prospects which shows solid growth but stable prices and wages.

The Fed's "Beige Book" survey, published on Wednesday, said there was strong industrial activity and consumer demand, but little evidence of serious inflationary pressure.

But it reported more pressure on wholesale prices, signalling that inflation worries will remain in the run up to the Fed's next meeting on interest rates on 5 October.

The Beige Book, which is published eight times a year, said "resurgent Asian demand" was helping to boost manufacturing.

Rate rises

The survey is based on information from business and other sources in the Federal Reserve System's 12 regional districts.

The report said: "All district economies continue to exhibit overall strength with most experiencing moderate-to-brisk growth."

But it added: "While price pressures at the consumer level remain mostly calm, numerous districts report significant increases in some materials prices."

The report will be one of the factors the Fed takes into consideration when deciding on short-term interest rates.

In August, the Fed raised US interest rates by 2.5% - the second successive raise following an identical increase in June.

Low inflation

Many analysts believe the rate will increase for a third time in October as Fed chairman Alan Greenspan remains determined to avoid an overheating economy.

Stronger-than-expected retail sales and a 30-year low unemplyment rate in August suggest the Fed may feel it needs to act.

However, inflation remains low and shows no sign of taking off.

The core rate - excluding energy and food - was up just 1.9% over the last year, the smallest rise in 33 years.

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