WASHINGTON, (Reuters) - The U.S. economy expanded at a modest-to-moderate pace between mid-February and the end of March, but inflation pressures remained in check despite more difficulties in attracting and retaining workers, the Federal

The U.S. Federal Reserve building in Washington, DC, U.S. on October 12, 2016. REUTERS/Kevin Lamarque/File Photo

Reserve said on Wednesday.

“On balance, prices rose modestly,” the U.S. central bank said in its periodic gauge of the health of the economy derived from surveying business contacts nationwide.

Firms mostly expected price growth to be mild to moderate over the coming months, the Fed added.

It raised its benchmark interest rate in March for the second time in three months and many policymakers appear bullish on the prospects of more tightening this year with the nation near full employment and inflation slowly rising.

That said, there is still debate within the Fed about just how rapid and sustained the pickup in inflation will be given that it has struggled to reach the central bank’s 2 percent target over several years.

Elsewhere in the report, most Fed districts said businesses had experienced more difficulty filling low-skilled positions and a larger number of firms said they faced more problems retaining workers.

Employers surveyed by the Fed in recent months have often reported rising wage pressures for specific sectors such as construction and highly-skilled jobs.

Modest wage pressures broadened during the most recent survey period, the Fed said, and a larger number of firms mentioned higher turnover rates.

Firms in the Fed’s Atlanta district said they continued to “struggle to find, hire and hold onto quality workers, particularly in skilled technical jobs, but also in sales, finance, information technology, and compliance positions,” according to the report.

Despite a slowdown in jobs growth last month, the U.S. unemployment rate fell to near a 10-year low of 4.5 percent and the number of jobs created continued to outstrip growth in the working-age population.

The Beige Book was compiled by the Richmond Fed with information collected on or before April 10.