The second quarter saw an increase in the US GDP to 2.4%.

In spite of an aggressive round of Fed policy tightening, economic growth in the United States surged in the second quarter.

According to preliminary figures released by the Commerce Department on Thursday, the largest economy in the world grew by 2.4% on an annual basis between April and June. 1.8% growth had been forecast by economists.

The reading increased from 2.6% in the fourth quarter of 2022, which was down from 2.0% in the first three months of this year.

Furthermore, it occurs the day after the Fed raised interest rates by 25 basis points, bringing them to their highest level in more than 20 years. The Fed's extraordinary policy-tightening programme to contain high inflation included this move as the most recent step. Early in 2022, in March, interest rates were almost zero.

While markets are only pricing in a 20% likelihood of a rate rise of a comparable amount at the September meeting, Fed Chair Jerome Powell left the door open for another rate increase.

After reaching a peak of over 9% in June 2022, inflation has since started to decline, although the labour market and consumer expenditure have remained solid. The patterns have fuelled concern about a so-called "soft landing," in which the United States manages to control inflation without seriously destabilising the larger economy.

(Sources: investing.com)