(Reuters) - U.S. economic activity has expanded slightly in most regions since early October, with employment growth "subdued" and inflation rising at a modest pace and businesses expressing optimism about the future, the Federal Reserve said on Wednesday in a summary of surveys and interviews from across the country known collectively as the "Beige Book."

"Though growth in economic activity was generally small, expectations for growth rose moderately across most geographies and sectors," the U.S. central bank said in its regular temperature check on the economy, drawing on observations from the business and community contacts of each of its 12 regional banks through Nov. 22. "Business contacts expressed optimism that demand will rise in coming months."

The findings will help shape Fed policymakers' thinking about how fast and how much further they may need to lower the policy rate, which is currently in the 4.50%-4.75% range after reductions in September and November.

The Fed's last rate-setting meeting of the year is in two weeks, and financial markets are betting it will deliver a quarter-percentage-point cut in borrowing costs despite inflation that has proven to be stickier than hoped for.

One key measure of underlying price pressures, the 12-month change in the personal consumption expenditures price index stripped of food and energy costs, has been stuck in a range of 2.6% to 2.8% since May, well above the Fed's 2% target.

Even so, many Fed policymakers say they remain convinced that inflation is headed back down, particularly with short-term borrowing costs well above the so-called neutral level where they would cease to be a significant drag on the economy.

As of September, most policymakers estimated the neutral rate to be no higher than 3.5%.

With the labor market still strong but gradually cooling, Fed officials are wary of leaving the policy rate too far above that level for too long.

Economists expect a monthly jobs report due out on Friday will show payroll growth rebounded in November after a dismal showing in October when hurricanes in the U.S. Southeast and a since-settled strike at Boeing weighed on hiring. The unemployment rate, however, is forecast to tick up to 4.2% from 4.1%.