The US economy recorded its fastest growth in three years during the last quarter, leaping ahead at an annual rate of 6.9 per cent, thanks to soaring consumption and inventories.

The figure, which was revised by the Commerce Department from a gross domestic product estimate of 5.8 per cent, is adding to expectations of further interest rate rises. "The economy was smokin' during the fourth quarter," said Mr Richard Yamarone of New York-based Argus Research Corp. "You can bet Federal Reserve chairman Alan Greenspan is determined to extinguish this blaze."

Mr Yamarone said he expects two more one-quarter percentage point interest rate increases by midyear.

The Commerce Department also released figures for full-year GDP growth which, at 4.1 per cent for 1999, show a slowing from growth of 4.3 per cent in 1998 and 4.5 per cent in 1997.

The revised figures put up consumer spending across the board, and raised estimates of government spending. Exports were higher than thought, and imports lower. Inventories grew slightly faster than had been estimated.

As in its earlier GDP report, the department estimated inflation at 2 per cent. But the uncertainty over oil prices and their impact on the economy creates some doubt about future growth.