Surge in growth for US as price pressures build

THE AMERICAN economy surged out of the first quarter’s arctic slump during the three months to July, with growth outstripping analysts expectations, and the Federal Reserve hinted at rising inflationary pressure.

On an annualised basis, GDP jumped by four per cent in the second quarter, ahead of the three per cent increase expected.

The US economy’s shocking performance in the first quarter, was revised upwards slightly, with a 2.1 per cent contraction replacing the 2.9 per cent previously estimated.

The Federal Reserve’s policymakers announced another $10bn (£5.92bn) tapering of the quantitative easing (QE) programme, as expected. In a statement, the officials said “the likelihood of inflation running persistently below 2 per cent has diminished somewhat,” since the previous meeting.

It was also the First Federal Open Market Committee (FOMC) meeting in which a member has dissented in favour of a more hawkish stance – Charles Plosser argued against saying that it would be appropriate to keep rates low for a considerable time after quantitative easing (QE) ends.