THe FOMC concludes a two-day meeting on 1 May (NY time). There is, however, little chance that the FOMC will take a further step toward tapering (the minutes to their last meeting showed a movement in this direction).
Yes, there has been a bit of soft data (after the Chicago PMI -3.4pts to 49 in April, a sub-50 ISM looks possible — and yes the US slowdown does pressure my on hold RBA call for May), but that’s not the main reason.
The main reason is that inflation is low — and is falling. The opponents of the current crop of global easy money policies have some (difficult) explaining to do — pretty much everyone agrees that easy money makes inflation too high … well, right now it’s way too low.
The ex-food ex-fuel measure the FOMC prefers is running at ~1.1% AR over the past 3m, 6m and 12m periods. The last two times it got this low the FOMC eased further.
I prefer the Trimmed mean measure, and this is ~1.3% AR over the 6m (and ~1.4% AR over the past 3m and 12m). That’s still too low when the target is 2% — and especially so given that growth is slowing.