Strong Q3 US GDP keeps Fed cautious as markets reassess rate-cut expectations
The U.S. economy expanded at an annualised pace of 4.4 per cent in the final estimate for the third quarter of 2025, according to data released on Thursday by the Bureau of Economic Analysis. The economy expanded at an annualised pace of 4.3 per cent in the third quarter of 2025, according to the initial estimate. In the second quarter, the real GDP grew by 3.8 per cent. According to the release, the increase in real GDP in the third quarter reflected increases in consumer spending, exports, government spending, and investment.
The GDP data arrives at a critical juncture for markets, which are trying to gauge whether economic activity is cooling enough to allow the Federal Reserve to begin cutting interest rates later this year.
Investors will closely examine the composition of growth, particularly the contribution from consumer spending, which has remained resilient despite elevated borrowing costs. Business investment, government spending, and net trade will also be scrutinised for signs of durability or emerging weakness.
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