5 Wall Street banks discuss next Fed moves after a blowout US Q2 GDP report

The U.S. economy displayed more robust growth than anticipated for the second quarter, with real GDP increasing by 2.8% on a quarterly basis. This surge has brought the year-over-year gain to 3.1%. The data revealed that real consumer spending on services was a significant contributor to this stronger-than-expected performance.

The GDP deflator, an inflation indicator that reflects the difference between nominal and real GDP, went up by 2.3%. Meanwhile, nominal GDP, which is not adjusted for inflation, saw a rise of 5.2%.

These figures suggest that the economy is expanding at a healthy pace, with inflationary pressures being evident but not outpacing the growth in real output.

Here are 5 Wall Street banks discussing what comes next from the Federal Reserve.

Citi: "Fed officials will breathe some sigh of relief that final private domestic demand at 2.6% was equally as strong as in Q1. But we would caution against extrapolating Q2 strength to coming quarters and continue to expect a weakening labor market that will have Fed officials cutting rates at each consecutive meeting starting in September."

BofA: "Finally, to the extent any one GDP number affects our monetary policy outlook (employment and inflation matter more for obvious reasons), this report fits our view that the Fed can remain patient. We continue to expect the Fed to start cutting in December; Though September has moved closer to the baseline given recent incoming data that point to cooling in labor markets and a return to disinflation."

ING: "The economy is facing more challenges in the second half of the year and with the Fed sounding more relaxed on the path ahead for inflation, we expect a growing focus on activity to deliver rate cuts from September."

Wells Fargo: "While that handily exceeded expectations, we suspect that it may be the fastest GDP growth rate we are apt to see for the foreseeable future."

Goldman Sachs: "Following today’s report, we raised our June core and headline PCE inflation estimates by 1bp each to 0.21% and 0.11%, corresponding to year-over-year rates of 2.64% and 2.53%, respectively."