Much of the US saw weak economic growth in April and May, while living costs increased, the Federal Reserve said in its closely monitored Beige Book.
The US central bank's regular snapshot of business activity across the country described weak consumer spending and job cuts linked to falling home sales.
The report comes in the same week that the Fed boss Ben Bernanke said the threat of recession had faded.
The remarks were a strong signal that there would be no more US rate cuts.
Many analysts predict that US interest rates will remain at 2%, a four-year low, when policy makers next meet, and some believe that interest rates could even rise later in the year.
(BBC)
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