In the wake of the softer-than-expected payroll gains for April in the monthly employment report, the inflation data for April in the May 13 week become the next signpost for the outlook for Fed monetary policy. Markets reacted to the hint of softening in the labor market by anticipating easier financial conditions. However, it is only one month’s data and only half of the Fed’s dual mandate for maximum employment and price stability. The FOMC’s vigilance on the inflation front means that its attention may shift back more to the latter even if the FOMC statement from May 1 said that risks at that time were more ... (full story)