Q1 GDP raises uncertainty on inflation
by Brian Turner
The U.S. dollar was slightly higher Thursday as analysts debated whether gross domestic product (GDP) data meant a coming rise or fall in the dollar’s value.
In the first quarter the GDP showed growth of 3.1 percent, which was lower than expected, but the core personal consumption expenditures (PCE) deflator, which the Federal Reserve prefers as a measure of inflation, rose to 2.2 percent, up from 1.7 percent the previous quarter.
The first number could spur the Fed to pause in tightening the economy, but the latter figure suggests that it should continue on its current course of tightening, facing a choice of either reining in inflation or putting up with unacceptable levels of unemployment, according to one expert who warns that the economy may be approaching stagflation. Other experts, however, have argued that stagflation might actually support the dollar.
The dollar was up to $1.2913 in relation to the euro and stood at ¥105.97 against the yen.
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