Strongest US Growth Since 2021

Gross domestic product is projected to have grown at an annual rate of 4.5% last quarter. The Fed has been trying to quell inflation by dampening demand while avoiding a recession. The Fed chief said that policymakers are likely to hold rates steady at their next meeting.—bloomberg.com

Answer the following questions to check your understanding of the story.

How does the Fed “quell inflation by dampening demand”?

The Fed ____________.

a) implements a policy of inflation rate targeting

b) sets the long-term bond rate above the federal funds rate

c) raises the federal funds rate and engages in quantitative tightening

d) buys securities and increases the quantity of bank reserves

Why is the Fed likely to hold rates steady?

The Fed is likely to hold rates steady because ____________.

a) the Taylor Rule indicates that the current interest rate is the interest rate that will result in a 2 percent inflation rate

b) it is the most popular decision with U.S. consumers

c) they are unsure that raising interest rates further would have any effect on inflation

d) they want to wait for the economy to respond to the current policy without moving the economy into recession

Strongest US Growth Since 2021

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