Federal Reserve Beige Book signals new developments: inflation delayed, rate cuts postponed become a certainty

[BlockBeats] The latest Federal Reserve Beige Book has just been released, dated January 15. Data shows that since mid-November last year, economic activity in most U.S. regions has been rebounding, with growth accelerating from “slight” to “moderate.” This improvement is the most noticeable in recent cycles.

But there’s a problem— the labor market hasn’t kept pace. Out of 12 regions, 8 directly reported that employment levels have hardly changed, and wage growth has even retreated back to the “normal, moderate” range. In other words, the labor market is cooling down, although not yet out of control, but the trend is clear.

The more critical aspect is inflation. Previously, companies absorbed costs to sustain themselves for a while, but as inventories before the implementation of tariffs are gradually depleted, this approach is no longer viable. Now, companies are starting to directly pass tariff-related expenses onto end prices. Regions like New York and Minneapolis have confirmed this—price increases are already significantly squeezing corporate profits, with healthcare and insurance costs rising the fastest.

This change aligns perfectly with recent statements from Federal Reserve officials. Their message is: the economy hasn’t entered recession, employment remains resilient, but the path for inflation to decline is uneven. Under the disturbance of tariffs and policy uncertainties, an early rate cut is basically unlikely. The most realistic expectation is that the Fed will probably wait until around mid-year before taking further action.

The core logic is quite simple: the signals from the Beige Book are not “the economy is strengthening,” but “inflationary pressures are shifting later.” When these costs are finally reflected in PPI and CPI data, the Fed’s room for maneuver will be further compressed. This is also why global markets’ expectations for easing policies have been continuously revised— the environment has changed, and expectations naturally need to adjust accordingly.