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The Barclays Research Team offers a sneak peek into today’s key market moving events, which include the UK CPI report due at 0830 GMT and FOMC May meeting minutes scheduled for release at 1800 GMT.

Key Quotes:

“UK inflation data: We forecast the headline rates of CPIH and CPI to have risen by 0.1pp in April to 2.4% and 2.6% y/y, respectively, driven by a rebound in clothing prices, which were very soft in March relative to usual seasonal patterns. There is a degree of uncertainty associated with this print as a result given the elevated volatility displayed by clothing prices recently. We forecast headline RPI will rise to 3.4% y/y

FOMC minutes: The May FOMC statement was largely inconsequential, but there were some important language changes around inflation, including the introduction of the use of “symmetric” when discussing the outlook for inflation. In addition, the statement dropped the language that the committee will be “monitoring inflation developments closely.”  

We interpret these changes as signals that the committee sees downside risk to inflation as having diminished and will tolerate a modest overshoot of its inflation target, should it materialize. We will look to the minutes for clarification.  

In addition, we expect a more ranging discussion about potential language changes that may be forthcoming, including whether monetary policy is expected to become restrictive over time.  

With a new chair in place, we expect some other reorganization of the statement over time to suit both the outlook for monetary policy and the chair’s preferred communication style.”