According to the minutes of the Federal Reserve’s April policy meeting released last week, policymakers see the possibility of an interest rate hike coming in June. It is the strongest sign that the Fed is planning measures to tighten in the near future, as readings on inflation have risen and employment rate is on the rise.

The minutes stated that “most participants judged that if incoming data were consistent with economic growth picking up in the second quarter, labour market conditions continuing to strengthen, and inflation making progress toward the committee’s two per cent objective, then it likely would be appropriate for the committee to increase the target range for the federal funds rate in June”. After almost a decade of no hikes, the Fed raised its key interest rate in December from a range of 0.25 to 0.5 per cent, but since then it decided against additional interest rate hikes amid worldwide economic headwinds and another winter’s lull in the US recovery.

Separately, in the UK, consumer price inflation (CPI) decelerated unexpectedly in April, which was principally due to a fall in air fares and clothing prices, and factory costs continuing to fall due to a drop in petroleum product prices.

Data from the Office for National Statistics showed that inflation fell to 0.3 per cent in April, while economists anticipate it to stay at the 15-month high of 0.5 per cent seen in March. Core inflation that excludes energy, food, alcoholic beverages and tobacco, slowed from 1.5 per cent in March to 1.2 per cent in April.

Month-on-month, consumer prices rose by 0.1 per cent in April after a rise of 0.4 per cent in March. Economists had projected a 0.3 per cent rise in consumer prices.

Finally, in Germany the number of people in employment rose further in the first quarter of this year.

The number of people working increased by 533,000, or 1.3 per cent, to 43.1 million in the March quarter year-on-year. It was also quicker than the one per cent rise in the last quarter of 2015.

The service sector was the main driver behind the rise. Employment in the industrial sector, not including construction, rose by 0.2 per cent.

When compared with the previous quarter, the number of people in employment in the first quarter fell by 0.9 per cent, or by 384,000.

This report was compiled by Bank of Valletta plc for general information purposes only.