US economic growth much depends on the path of inflation. The U.S. economy has continued to grow in the face of elevated inflation and a federal funds rate currently at a 23-year high. It now sits in a range of 5.25% to 5.50%, up from near zero roughly two years ago.

“The U.S. economy has adapted well to this new rate environment,” says Pramod Atluri, a portfolio manager with The Bond Fund of America®.

The Fed’s battle against inflation has made significant progress, helping push consumer price increases down from 9.1% in June of 2022, to a range of 3% to 4% over the past few months. However, that is still above the Fed’s goal of 2%, a fact that calls into question whether the central bank will cut rates this year or stand pat. Based on their public comments, Fed officials appear biased toward cutting.

How the US economy goes will be dependent on inflation among many factors. Read more about it in Capital Group’s Insights here.

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