*Zoom, Zoom*

According to the final estimate released today by the Commerce Department, 1st Quarter GDP growth clocked in at a faster-than-realized 5.6%.  (Full DOC report available here)

That's the fastest pace in 2.5 years.

The markets appear ebullient, but I heard an interesting theory on CNBC this morning on why else that might be.  The commentator suggested that today's Fed policy statement, due out around 2 pm, could bring us not just a quarter point hike (which would be the 17th consecutive such hike), but a half point, pushing Fed Funds up to 5.5%.

Fed Funds futures prices have recently suggested a quarter point hike today and an 87% chance of another hike in August, but only a slim chance of a double hike today.  The market is typically perturbed with Fed surprises to the hawkish side, but this commentator suggested the markets were rallying this morning in anticipation of just that.  His supposition was that a 50 basis point move today would signal (depending on the accompanying language) that the Fed was now done with its tightening campaign, leaving the markets to go back to reflecting business fundamentals and economic conditions, rather than simply handicapping Fed policy.

Fed aside, this is further evidence that the economy truly surged in the first quarter, following its temporary breather at the end of 2005.