The US economy experienced a decline in economic growth rate during the first quarter of 2023, with GDP expanding at an annualized rate of 1.6% instead of the predicted 2.2%. This downward trend could be seen as a positive indicator for the Federal Reserve, which aims for a strong economy without keeping prices too high. Inflation has slightly increased to 3.5% year-over-year in March, according to the latest consumer price index (CPI) data from the Labor Department, which is below the peak it reached in June 2022 but higher than the central bank’s 2% target.
The unexpected rise in inflation, along with data on job market and GDP, has given the Federal Reserve room to potentially lower borrowing costs. The central bank committee had raised borrowing costs to a range of 5.25 to 5.5 percent in July after maintaining near-zero rates in March 2022.
The Federal Open Market Committee (FOMC) will review the latest growth report and other economic indicators when they meet next week to determine whether they will lower borrowing costs or maintain them. They will also consider the latest data on the Fed’s preferred inflation index, the personal consumption expenditures (PCE) index, set to be released on Friday. Despite concerns over high prices, the US economy has shown resilience with the addition of 303,000 jobs last month and a prolonged period of unemployment rates below 4%, which is