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U.S. economic and inflation data challenge Waller’s assessment that the economy is “not yet overheated,” as economists warn of the risk of further rate hikes

BlockBeats reported that,October 30, real U.S. third-quarter GDP grew at an annualized quarter-on-quarter rate of 3.4%, above market expectations, while consumer spending and business equipment investment grew by 3.8%and 20.9%。September PCE respectively. The price index rose 3.6%year on year, above August’s 3.4%. Strong growth and persistent inflation challenge Federal Reserve Chair Waller’s assessment that the economy is not yet overheated.

This week, the Federal Reserve voted 10 in favor and 2 against to keep the interest rate at 3.75%to 4%. Waller believes that technological advances such as AI may raise productivity, and that accelerating growth alone is insufficient to conclude that inflationary pressures are rising. As of Friday, market pricing showed that the probability of December raising rates by 25 basis points was approximately 80%.

Diane Swonk, chief economist at KPMG, said inflation remains broad-based, particularly in services that respond more slowly to interest rates, and it is not yet clear whether moderate cooling can resolve its persistence. She cautioned that tighter financial conditions are partly attributable to market expectations of subsequent rate hikes, which still require an actual policy response.BNY Investments Chief Economist Vincent Reinhart expects the Federal Reserve will still need to raise rates twice, with a risk of additional hikes if oil prices remain elevated.

Source: https://m.theblockbeats.info/flash/374696