US: Focus on CPI and Fed Minutes – BBH

Analysts at BBH point out that the US reports March CPI, and the Fed releases its minutes from the March FOMC meeting and are going to be the key economic releases for the day.  

Key Quotes

“The risk is on the upside of the market expectation for a flat CPI, which due to base effects, would rise by 2.4% from a year ago, up from 2.2%.  The core rate is expected to have increased by 0.2%, and this would lift the y/y rate above 2.0% for the first time in a year as some factors that the Fed has suggested were transitory are proving so.”

“The FOMC minutes are drawing more attention than usual.  The March meeting was Powell's first and a rate hike was delivered.  However, ideas that the minutes will reveal much insight into what officials were thinking about the rising trade tensions or the thrust of fiscal policy, which the CBO estimated this week would produce a $1 trln deficit in 2020 (two years earlier than previously expected) may be disappointed.”

“The minutes of central bank meetings should not be confused with an objective record of the meetings.  They are purposefully crafted as part of the official communication to help shape investor expectations.  This is to say that they are a policy tool.  Increased protectionism poses a downside risk to the economy.  Not much more can be said at this juncture.  The same thing is true of the fiscal position.  It poses risks, and it is too early to judge the economic consequences in full, but it will likely bring the Fed closer to its mandates of full employment and price stability (at it defines it).”