If the latest indications from the Fed's Beige Book are any guide, the US central bank remains on track with its projected two more interest rate hikes this year (after the first rate hike for 2017 announced last month).
The latest report also gives meat to Boston Fed president Eric Rosengren's comment that "the process [of shrinking the balance sheet] could begin relatively soon" and not later this year, as financial markets speculated when the minutes of the 14-15 March FOMC meeting was released.
The Beige Book report showed that economic activity continued to expand across all the 12 Federal Reserve Districts over the period from mid-February to the end of March.
While the Fed described the pace of expansion as "modest to moderate", the report also showed that employment increased across all districts. The tightness in the labour market -- most businesses reported difficulty finding not only highly skilled employees but low skilled ones as well and having problems retaining workers - could be a factor in preventing stronger expansion in the economy.
Still, the Fed still has room to manoeuvre. This is because despite the economy operating at full-employment and causing a broadening in wage increases, this isn't still flowing through into consumer price inflation.
Headline CPI inflation slowed to 2.4% in the year to March from 2.7% in the previous month and core inflation eased to 2.0% from 2.2% over the same period.