One way for policy to be more preemptive is to respond to forecasts of rising utilization rates and higher inflation, especially when supported by a recent pattern of strong growth and evidence of continued momentum. One can take an optimistic or pessimistic view of the recent Fed tightening.
The country has just recorded two consecutive quarters of growth, following up the 12.0 percent expansion registered in the second quarter of 2021 – the highest growth rate recorded since 1988 – with a 7.1 percent expansion in gross domestic product in the third quarter. Indeed, the third quarter growth surpassed expectations, leading to optimism for a more rapid return to pre-pandemic GDP levels.