Strong US Economy Growth, Rate Cut Risk Brewing

U.S. Economy Surprises with Strong Growth in Q3

The U.S. economy exceeded expectations in the third quarter, with GDP growing at an annualized rate of 2.8%. This growth rate is twice that of the previous quarter, reflecting a surge in consumer spending on homes and cars.

Challenges and Opportunities for the Federal Reserve

While the strong economic performance is a positive sign, continued growth could complicate the Federal Reserve’s decision to cut interest rates in September. The Fed has acknowledged that high rates were slowing output and causing inflation to slow.

Market Sentiment and Expectations for Rate Cuts

According to the CME FedWatch tool, there is a high likelihood of a rate cut at the September meeting of the Federal Reserve, with market sentiment favoring a decrease in interest rates.