The latest economic data showed that inflation remains higher than the Fed’s target, but is weakening – and economic growth is high at the same time. From the point of view of some experts, this is a rather unusual situation. Powell called the U.S. economy “surprisingly robust.”
GDP rose by 4.9 percent in the summer
Despite the high interest rates, gross domestic product rose by 4.9 percent in the summer compared to the previous quarter. That was the strongest growth in the world’s largest economy in seven quarters. Economists had on average only expected growth of 4.5 percent.
The boom in the US economy carries the risk that inflation could pick up speed again. The question for the future now is whether the Fed might consider further interest rate hikes necessary later on. Some experts in the USA can already imagine this for December or next year if the economy remains strong.
On the other hand, defaults in servicing loans have recently increased again and in surveys more consumers spoke of tightening finances. This could indicate that consumer spending may be cooling even without further interest rate hikes.
2023-11-01 19:27:21
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