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The Consumer Price Index (CPI) number in April, which arrived at 4.2% on a yearly basis, was a “very unpleasant surprise,”  Federal Reserve’s Vice Chairman Richard Clarida told Yahoo Finance on Tuesday, per Reuters.

Additional takeaways

“US  outlook is very very positive  and growth could hit 7%.”

“Most recent employment report highlighted near term uncertainty in labor market.”

“Baseline case remains for transitory inflation; if upward pressure proves persistent Fed would act to bring it down.”

“Pace of labor market improvement will pick up.”

“Going to take time to get a clearer case of how demand and supply will balance.”

“If upside risks take hold Fed will be able to offset that.”

“May be a time in upcoming meetings when the Fed can discuss scaling back purchases; depends on data flow.”

“Fed needs to acknowledge risks still exist on both up and down sides.

Market reaction

US Dollar Index inched higher and was last seen losing only 0.03% on the day at 89.80