The U.S. economy is still growing at a "modest to moderate" pace, with government budget cuts preventing a more robust recovery, the the Federal Reserve said Wednesday in its latest Beige Book.

The Dallas Federal Reserve district, which includes Houston and its sprawling economy, was the only one of the 12 districts to have reported "strong growth."

Manufacturing expanded in most districts since the previous Beige Book was released in April, while residential real estate and construction activity increased at a moderate to strong pace around the country.

Markets will continue to pay close attention to the latest data on the U.S. economic situation, but Federal Reserve Chairman Ben Bernanke recently assured that the fed funds rates will stay low for the time being.

"A premature tightening of monetary policy could lead interest rates to rise temporarily, but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further," the Federal Reserve Chairman told the U.S. congressional Joint Economic Committee on May 22.

RTTNews