- Following last week’s publication of the BOE’s May Inflation Report, today’s release of the minutes of this month’s MPC policy meeting is unlikely to shed any additional insight into the collective position. Nonetheless, the minutes are often informative about the range of views among MPC members and possibleshifts in the centre of gravity.
- There will be particular interest in potential departures from the central forecast that the amount of slack in the economy stands at 0.5% of GDP, the likelihood of a pickup in productivity growth over the forecast horizon, and underlying price pressures from the partial recovery in oil prices and strengthened wage growth.
- This evening’s minutes of the FOMC April meeting will also be scrutinised for variations in individual outlooks rather than providing any significant guidanceon the likely timing of a rise in the policy rate which markets expect to take place before the end of the year. The minutes of the March meeting indicatedthat some Committee members took the view that such a move could be premature given that headline inflation remained well below the 2% objective,energy prices continued to be soft and the dollar was rising.
- However, the subsequent pickup in oil prices towards $65 per barrel and 6% fall in the trade weighted USD exchange rate point to easing inflationary headwinds.
- German PPI and Euro area construction output figures for April are released this morning. German factory gate inflation has been in negative territory sinceJuly 2013 falling to a trough of -2.2% y/y in January. The following two months have seen an easing in the pace of decline and a further rise to -1.4% isexpected today which should support the view that euro area headline inflation is set to rise above zero in the coming months, according to Lloyds Bank.
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