GDP in those sectors normally most sensitive to interest rates has weakened over the past year and is now well below the pre-pandemic trend. The resilience of overall economic growth to higher interest rates is mainly due to ongoing recoveries elsewhere. While there is scope for GDP in those least rate-sensitive sectors to continue to grow, those recoveries are being supported by easing goods and labour shortages. This suggests that, even if a recession is avoided, disinflationary pressure should build.
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