Inflation data in the UK, US

U.K inflation slowed in April which saw the pound pare back some of its gains against the dollar and Euro. Due to the fact that the majority of the price decreases came from clothing and air fare the numbers are not too alarming (unless you are a retailer or airline company). Later today the US will come out with its prior month inflation numbers which will be looked at with a bit more scrutiny as the US markets continue to assess the interest rate situation in the US.

​The inflation portion of the Fed’s dual mandate seems to the place where wiggle room can be applied to the case for not raising rates as aggressively as the Fed projected. With the global headwinds we are seeing in Europe and Japan, and the debt worries in China there is no doubt that the Fed is looking for reasons not to start another round in tightening and sparking the volatility that came with it in December. In order for this to occur the Fed will need to see some softness in their mandates and inflation may be the best place to look for near term excuses.