Investing.com - The U.S. economy grew more strongly than expected in the second quarter, but inflationary pressures also showed signs of cooling, raising the possibility of an interest rate cut in September.
Gross domestic product increased at a 2.8% annualized rate last quarter, above the 2.0% rate expected, and considerably above the 1.4% pace seen in the first three months of the year.
Still, growth remained considerably slower than the 4.2% pace logged in the second half of last year.
Also of note was that the prices component of the index showed that inflation rose by 2.3% in the second quarter, a hefty fall from the 3.1% rate seen in the first quarter, and below the 2.6% expected.
The Federal Reserve’s favored gauge of inflation, the PCE price index, is due for release on Friday, and is also expected to show an easing in inflationary pressures.
The Fed is set to meet next week and is widely to keep interest rates steady, but these figures will increase the expectations of a rate cut in September.