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Stronger US growth may lead Fed to slow bond buys

August 29, 2013 • National News


FILE – In this Wednesday, May 8, 2013 file photo, Jeff Caldwell, 29, right, a chassis assembly line supervisor, checks a vehicle on the assembly line at the Chrysler Jefferson North Assembly plant in Detroit. The U.S. economy grew at a 2.5 percent annual rate from April through June, much faster than previously estimated, according to data released Thursday, Aug. 29, 2013, by the Commerce Department. The steep revision was largely because U.S. companies exported more goods and imports declined. (AP Photo/Paul Sancya, File)

WASHINGTON (AP) — A stronger-than-expected rise in U.S. economic growth last quarter will likely strengthen the hand of Federal Reserve officials who want to slow the Fed’s bond purchases next month.

The economy grew at a 2.5 percent annual rate from April through June, the government estimated Thursday. That was more than twice the growth rate in the first quarter and far above an initial estimate of a 1.7 percent rate for April through June.

The Fed is weighing key measures of the economy’s health before it meets Sept. 17-18 to decide whether to scale back its $85 billion in monthly bond purchases. The Fed’s bond buying has helped keep long-term borrowing rates near record lows. A stronger economy would need less support from the Fed.

Global financial markets have been under pressure over speculation that the Fed will slow its purchases and send interest rates in the United States higher. U.S. rates have already been rising in anticipation of a pullback in Fed bond buying. But the Fed may decide the economy is strengthening enough to withstand higher rates.

Last quarter’s faster growth “should give Fed officials more confidence that the Login to read more

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