The Federal Reserve's latest Beige Book report indicates that U.S. economic activity continues to expand at a modest pace, but rising energy costs and uncertainty due to potential conflict with Iran are impacting business decisions. Released on Wednesday, the report highlights significant increases in energy and fuel costs across all 12 Federal Reserve districts, attributing these to the ongoing Middle East tensions. The conflict is seen as a major source of uncertainty, complicating hiring, pricing, and investment decisions for businesses, many of which are adopting a cautious approach. The report, compiled by the New York Fed with data through April 6, notes that oil price shocks have led to the largest inflation increase since 2022. In response, several Federal Reserve policymakers have expressed a preference for maintaining steady interest rates to better assess the economic landscape.