US economy grew more than expected in Q4

US GDP expanded more than anticipated in the last three months of 2023, complicating the picture for interest rates as the Federal Reserve has to contend with stronger-than-expected economic growth amid a potential loosening of monetary policy.

The economy grew at a year-on-year rate of 3.3% in the fourth quarter, according to preliminary estimates released by the Bureau of Economic Analysis on Thursday.

This was a big slowdown from the significant 4.9% expansion registered in the third quarter, but will have come as a surprise to many economists who are broadly looking for growth of just 2.0%.

"With data showing greater resilience than many were anticipating, and with inflation seen ticking back up last month, traders have scaled back their near-term rate-cut expectations," said Manoj Ladwa, director of trading company ARJ Capital ahead of the data release.

"Indeed, recent Fed commentary has further pushed back against those looking for near-term cuts. With this in mind, the implications for today’s data are clear: an upside beat will be seen as further reason to delay easing," Ladwa said.

The second estimate for the fourth quarter, based on more complete data, will be released at the end of February.