A brisk start to 2024 means officials are now confident that the US economy will expand by 2.1 per cent this year, faster than most other advanced economies.
| Federal Reserve officials unleashed their optimism on Wednesday , unveiling projections for faster than expected US economic growth this year while still leaving room to cut interest rates three times.
“The economy is performing well,” Mr Powell said on Wednesday. Headline inflation of 2.4 per cent was edging towards the Fed’s 2 per cent target, he suggested. “We continue to make good progress on bringing inflation down.”Markets liked the news – and the Fed’s relaxed mood. The S&P 500 and Nasdaq Composite closed at record highs on Wednesday. Government bond prices rose as yields fell.
Even so, some economists believe recent US data – notably on inflation – will force the central bank to be more cautious. Academic economists in aInflation of some goods and services prices remains sticky. Petrol costs, Americans’ most visible gauge of price pressures, have risen 15 per cent since the start of January. Some other costs, such as rents and motor insurance, are still rising quickly.
The Fed’s big upgrade to forecasts for gross domestic product growth came without any comparable adjustment to its outlook on prices or jobs, defying historical norms in which defeating inflation through higher interest rates has typically led to recessions and steep rises in unemployment.
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