U.S. economic activity appeared to stall in recent weeks, a Federal Reserve report published on Wednesday showed, with job growth and inflation both slowing, and near-term business prospects looking slightly worse than previously.

“Expectations for future growth deteriorated a little, though contacts still largely expected a further expansion in activity,” the U.S. central bank said in its latest “Beige Book” compendium of surveys and interviews, conducted across its 12 districts through May 22.

Contacts across districts noted that while labour markets remained strong, they had “cooled some,” the report said, with businesses in some regions reporting a pause in hiring or reductions in staffing because of weaker demand or greater uncertainty.

Meanwhile districts reported that the pace of inflation had slowed, with prices rising “moderately” and contacts in most parts of the country expecting a similar pace of price increases in the coming months.

In May, Fed policy makers increased the benchmark short-term interest rate a 10th straight time, taking it to a range of 5.0 per cent to 5.25 per cent, and signalled that they were near or possibly at the end of a rate-hike campaign that began last March.

Since that meeting, economic data have generally come in stronger than expected, with the unemployment rate at a decades-low 3.4 per cent and inflation by the Fed’s preferred gauge at 4.4 per cent, more than twice the Fed’s target.

But many Fed policy makers since then have signalled they may wait before undertaking any further policy tightening. While inflation is still too high, they say, the full impact of the Fed’s rate hikes so far is still making its way through the economy, and the degree of credit tightening from bank failures in March remains difficult to gauge.

The Fed’s snapshot of business, bank and worker conditions published Wednesday also said financial conditions “were stable or somewhat tighter” in most of the country.

Fed policy makers have said credit conditions are a key input to their calculations for monetary policy-setting.

Over all, bank-sector stress appears to have receded in the months since the March collapse of Silicon Valley Bank and Signature Bank, despite the failure of an additional regional bank – First Republic – on May 1.

U.S. lawmakers look on course to approve a deal struck over the weekend that raises the debt ceiling and averts a catastrophic default on U.S. Treasuries.

Fed policy makers next meet June 13-14, before which they will get several additional key pieces of economic data, including the monthly government labour market report for the month of May, and a fresh read on the consumer price index.

The Beige Book may also help shape their views of where the economy is heading, and over all did not signal the economy is either experiencing a hard stop or, conversely, a resurgence that would suggest the Fed’s rate hikes to date are not doing their job to slow the economy.

About half of districts reported no change in economic activity in recent weeks, the report showed, while four reported small increases and two reported “slight to moderate declines.”

And there were plenty of pockets of weakness.

“One department store contact reported a sharp sales decline in his stores that he said had ‘worsened throughout March and April,’” the Cleveland Fed said.

The Minneapolis Fed, like some other districts, noted growth in consumer spending over all, but a decrease in activity at minority and women-owned businesses, with one contact who provides technical assistance to women entrepreneurs noting that higher interest rates “scare new entrepreneurs.”

At the St. Louis Fed, banking contacts said loan demand had softened and they expected further weakening ahead. “Contacts reported that clients have been taking distributions from their portfolios to pay off loans and avoid new borrowing,” it said.

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