Stronger economic growth in the second quarter in the US has provided support to the Federal Reserve as it signalled it is still on course to raise interest rates later this year.
US GDP increased by 2.3 per cent in the second quarter. This comes after a disappointing first quarter that saw the economy grow by a revised 0.6 per cent.
The data follows the latest meeting of the Federal Open Market Committee yesterday, where it stated the job market in the US was seeing “solid” jobs gains, suggesting it is on course for a rate rise this year.
Steve Murphy, US economist for Capital Economics, expects GDP to average close to 3 per cent annualised in the second half of the year. He said “this should support the case for higher interest rates sooner rather than later”.
Elsewhere, Nancy Curtin, chief investment officer at Closer Brothers Asset Management, was less impressed by the latest data.
“This growth isn’t shooting the lights out by any means,” she said. But added: “Let’s not pretend that this will be enough to deter [Janet] Yellen from a rates rise later this year.”
