U.S. economic growth dropped to an estimated 3.1-per-cent annualized rate in the first quarter this year after reaching 3.8 per cent in 2004's fourth quarter, according to an initial estimate released Thursday by the U.S. government. Soaring fuel costs were blamed for most of the slowdown, which was larger than expected. Economists had predicted the gross domestic product (GDP) would grow at a 3.5-per-cent clip. The rate reflected the slowest GDP growth since the first quarter of 2003, when an annualized rate of 1.9 per cent was reached, the U.S. Commerce Department said. Nonetheless, consumer prices have been steadily rising, spawning anticipation that the U.S. central bank - the Federal Reserve - will again raise interest rates when its Open Market Committee meets Tuesday. Since June, the panel has hiked interest rates from the lowest figure in decades of 1 per cent to the current 2.75 per cent. But experts do not believe that rate increases will eclipse a quarter-point. "With the softer growth numbers we've been seeing, the Fed doesn't have much reason to do anything differently than it has been doing," John Shin with Lehman Brothers Inc., told the Bloomberg financial news agency. "Inflation is picking up, and there's no concern that growth will plummet, so they'll keep hiking interest rates in 25- basis-point chunks." --More 2333 Local Time 2033 GMT
