The U.S. economy is in a sweet spot where it's growing but not overheating, the Federal Reserve said Friday in its latest official report to Congress.
Growth is solid, unemployment is low and price increases are modest, the Fed said. The only real notes of caution in the 63-page report were sharply rising oil prices and the escalating trade war, but so far, the Fed said it sees little sign either of those factors is likely to derail the economy.
The Fed stressed repeatedly in the report that it plans to hike interest rates at a “gradual” pace. Some economists and Wall Street traders fear inflation will rise rapidly from President Trump's recent tax cuts and his burgeoning trade war, forcing the Fed to increase interest rates quickly to counterbalance it. Inflation hit a six-year high in June of 2.9 percent, according to government data released this week.
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