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    • Fed meeting: Live coverage of key interest rate decision and Powell press conference
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    Fed meeting: Live coverage of key interest rate decision and Powell press conference

    Harry Posted on

    The Federal Reserve is expected to cut interest rates again today, and it would be shocking if the central bank didn’t do so. But investors want to know how aggressively the Fed will act given the surprising strength of the U.S. economy.

    Gross domestic product increased at a rapid annual rate of 2.8% in the third quarter, following a 3% increase in the second quarter. The Fed expected the economy to slow down by now, but it hasn’t.

    Some economists argue that if the Fed cuts interest rates too quickly while the economy is strong, it could reignite inflation. Faster growth tends to increase inflation because competition for labor and scarce resources raises prices.

    However, interest rates appear to be much higher than they need to be to keep inflation under control. Inflation has also slowed down close to the Fed’s 2% target, at least for now.

    The PCE index, the Fed’s preferred inflation barometer, rose slightly at 2.1% in the 12 months ending in September.

    Harry
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