US Economy Growing Faster Than Expected, Causing Dilemma for Fed on Rate Hikes
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The US economy is growing faster than expected, with low unemployment and inflation dropping back towards the Fed's 2% target. This creates a dilemma for the Fed on whether rate hikes have gone too far.
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There are questions around whether strong growth can continue without rekindling inflation, given low unemployment and rising wages and confidence.
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Markets expect the Fed to start cutting rates in 2023 to support growth, with the timing and number of cuts key issues at this week's FOMC meeting.
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The strength of the US economy owes partly to fiscal stimulus and infrastructure spending under Biden, although this has increased national debt.
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Fed policy has economic implications and may become politicized in an election year, given the potential boost rate cuts could provide Biden.