At the Federal Reserve’s meeting on December 16, interest rates are expected to be raised. Fed chairwoman Janet Yellen insists that the start of the rate-hiking cycle – almost 10 years since interest rates were last increased (in June 2006) and seven from when the Fed slashed rates close to 0% – will be gradual. This is so as not to rock the recovery which remains a little fragile. Businesses slashed inventories in Q3, from a US$113.5bn gain to only US$56.8bn, preferring to rely on existing stocks to meet demand rather than ramp up production. The main impetus to growth came from domestic demand. Investment did slow, from 4.1% (q-o-q annualized) in Q2 to 2.1%, underscoring firms’ ongoing caution. However, consumer demand was spurred by low oil prices and inflation, giving rise to a 3.5% annualized surge in disposable income. This helped personal consumption to advance by 3.2%.