After the short-lived optimism that followed the end of the Iraq War and the fall in oil prices, and amidst the flow of mixed economic data, observers of the international economy were confronted with two pieces of news, both emanating from the United States, which gave pause for thought. The first was the Fed’s communiqué from the early May Federal Open Market Committee Meeting.
In it, the Fed stated that the balance of risks on inflation was in the downward direction.