WASHINGTON - Bank lending increased throughout the country last month, with commercial and industrial loans showing the strongest growth, the Federal Reserve Board reported Wednesday.

Underwriting standards, moreover, are holding firm, according to the Beige Book, the Fed's periodic report on economic conditions.

"Lending terms in April were reported to be substantially the same as earlier in the year, but competition for business loans remains strong," the report said.

Surveying its 12 district reserve banks, the Fed found that the economy had continued to expand last month, although at a slower pace.

"Most districts reported sluggish growth in retail sales, while manufacturing was up by varying degrees in most districts," the Fed said.

The central bank also reported good news on the inflation front. Increases in commodity and industrial prices moderated, or prices remained stable, it said. Also, manufacturers were not passing price increases through to consumers.

Economists welcomed the report.

"It corroborates what we've been getting from the weekly and monthly statistics," said Nicholas Perna, chief economist at Shawmut National Corp. in Connecticut.

Mr. Perna said the report reinforces his belief that the Fed will not raise interest rates when its policymaking Federal Open Market Committee meets May 23.

Other economists concurred.

"The Fed will wait and see if this slowdown is temporary or long- lasting," said Larry Wipf, regional economist at Norwest Corp. in Minneapolis.

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