Fed: Rate hike in December on the table if data point to renewed strong growth in Q4 – Commerzbank
US Real GDP grew somewhat more strongly than expected in the third quarter. Economists at Commerzbank analyze how growth figures could guide the next Federal Reserve actions.
The Fed is still waiting for the economy to slow down
The US economy grew strongly in the third quarter, with real GDP up 4.9%. The strong growth in the third quarter had already been flagged by high-frequency data. The GDP release will thus not cause a change of monetary policy at next week's FOMC meeting.
The Fed is likely to keep key rates unchanged. For the Fed, however, it is important that growth slows down soon in order to reduce demand pressure. Otherwise, it is hard to imagine inflation weakening further toward the Fed's target.
If the data of the next few weeks point to renewed strong growth in the fourth quarter – which we do not expect – a rate hike in December would then be on the table.
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FXStreet Insights Team
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