All eyes on Fed as US growth crawls in Q1

  • HT Correspondent, Hindustan Times, Washington
  • Updated: Apr 29, 2015 23:17 IST

The past winter was severe. It’s actually still on in parts, keeping shoppers home, mostly causing in combination with other factors an unexpected slow down in US economic growth.

Stocks fell on Wednesday as new growth figures announced by the US department of commerce showed that the American grew only by 0.2% in the first quarter, lower than expcted.

All eyes are now on the Federal Reserve, which is expected to issue a statement at the end of a two-day meeting, in which it is likely to keep interest rates low.

The economy had advanced at a 2.2% pace in the fourth quarter and 5% in the third, and economists surveyed by The Wall Street Journal had expected a 1% growth in the first quarter.

But 0.2% was way below, and completely unexpected.

“The deceleration in real GDP growth in the first quarter reflected a deceleration in personal consumption expenditures), downturns in exports, non-residential fixed investment, state and local government spending, and a deceleration in residential fixed investment that were partly offset by a deceleration in imports and upturns in private inventory investment and in federal government spending,” the department added.

India would be watching closely the Fed announcement. An interest rate increase may lead to a flight of foreign capital away from India, fears of which mauled the rupee in 2013. India, however, is in a much better place now, thanks to record forex reserves and other domestic factors.

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