US economy grows at its fastest pace in two years

The U.S. economy grew at its fastest pace in nearly two years in the third quarter, raising concerns that the Federal Reserve may have to raise interest rates again.

Gross domestic product grew 4.9 percent as higher wages boosted consumer spending, higher than analysts’ expectations of 4.3 percent growth.

That came as the European Central Bank yesterday kept eurozone interest rates at 4 percent, a sign that its aggressive increases were starting to drive down prices. Interest rates were increased ten times in a row.

Inflation has almost halved from its peak, although at 4.3 percent it is still above the 2 percent target.

The Bank of England is expected to maintain interest rates when its monetary policy committee meets next week. Inflation currently stands at 6.7 percent.

Growing at pace: Gross domestic product grew 4.9 percent as higher wages boosted consumer spending, ahead of analyst expectations of 4.3 percent growth

The pound briefly fell to a three-week low against the dollar yesterday as traders bet the central bank will leave interest rates unchanged next Thursday.

Meanwhile, the Confederation of British Industry (CBI) has released data showing that UK retailers have suffered their worst October in six years as consumers slow down their spending due to the cost of living crisis.

The monthly retail sales balance fell to -36 through this month. In the year up to and including September it was -14. The High Street is bracing for further pain as sales are expected to fall again next month ahead of the crucial Christmas period.

CBI economist Martin Sartorius said: ‘Retail is still in a dangerous position. While slowing inflation should help shore up household incomes, retailers will continue to face headwinds from higher energy and borrowing costs.”