WASHINGTON -- While the economy continues to grow at a steady pace, rising interest rates have engendered new uncertainties among consumers and businesses, the Federal Reserve reported Wednesday.

In its periodic look at regional economic activity, the central bank reported "solid economic growth" in most of the country. Lending continues to pick up, with consumer demand far outpacing that by companies.

But some surveyed by the Fed said rate changes have made them more cautious about the future. A few suggested this caution was leading some businesses to hold off on new projects.

Fear Begets Caution

And while rate increases have led some "fence-sitters" to enter the home-buying market, lenders in some areas say they are "cautious about future loan demand because of their fears of further rate increases."

The Fed's report, called the Beige Book, is prepared every six weeks by the Fed's district banks.

The Federal Open Market Committee, which next meets on May 17, uses the report to help guide monetary policy.

A closer look at regional economic conditions follows:

Boston: A "moderate recovery" continues, with increasing activity in retail, manufacturing, and residential real-estate sectors. Housing sales throughout much of the area are stronger than they have been in a decade.

New York: Economic activity is "by-and-large more favorable," although loan demand remains mixed. A third of those surveyed have raised rates on deposits, and most others say they are likely to soon.

Philadelphia: Bankers say consumer confidence is improving and they expect personal lending to stay strong. Much of the rising loan volume has come from consumer installment lending.

Cleveland: Bankers report mixed loan demand, although consumer lending outpaces that by businesses. All bankers contacted expect further increases in rates this year.

Richmond: Continued economic growth in many sectors, but "less certain" trends in the financial sector. Mortgage refinancings are dropping, but consumer and business loan demand remains strong.

Atlanta: Continued expansion "at a healthy pace," with loan demand more mixed than in recent months, mostly from large declines in home refinancings. Most say its too early to tell if rate increases will affect other types of loans.

Chicago: Continued improvement, with some reporting that higher rates are bringing more homebuyers into the market, "potentially borrowing from sales later in the year." Several bankers said residential refinancing has "dried up."

St. Louis: Robust expansion, with about a third of those surveyed expecting conditions to keep improving. Loan demand, especially by consumers, continues to increase. Rates paid on deposits have risen only slightly.

Minneapolis: Strong growth overall, with car sales and construction particularly strong. Asked about rising rates, one home builder said, "We're concerned, but so far all it's done is get the fence sitters off the fence."

Kansas City: Healthy growth, with housing starts "significantly higher than a year ago" and expected to remain strong. Mortgage demand is dropping as refinancing fall. Deposits at most banks are rising.

Dallas: Moderate expansion, with construction and real estate activity increasing in most of the region. "Fear of higher interest rates" has led home sales in Dallas and Houston to surge.

San Francisco: Loan demand is strong or improving in most of the region. Construction activity is "booming" in all parts of the West except California and Hawaii. In California, there has been some increase in lending, especially in home mortgages and real estate construction.

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