The US Federal Reserve held interest rates steady at the conclusion of its two-day policy meeting last week. It acknowledged rising inflation, but gave little indication that policymakers are worried about a sudden, rapid rise in prices or an abrupt slowdown in economic growth that could alter its gradual pace of interest rate increases.

The Federal Open Market Committee’s unanimous decision not to raise rates immediately after a March increase had been widely expected. The official statement issued by the committee gave no indication that officials plan to raise rates faster than previously telegraphed.

In the meantime, the Federal Reserve’s preferred inflation metric hit its two per cent target in March after six years of falling short.

The Commerce Department’s price index for personal consumption expenditures (PCE), which excludes volatile food and energy prices, was up two per cent from a year earlier in March, the first time in more than a year that it was on target.

Inflation is now above the median of he Fed officials’ projections from their March meeting. Investors have embraced the ‘inflation is back’ theme, temporarily driving the yield on 10-year Treasuries above three per cent.

Finally, GDP in the 19 countries that share the euro expanded by 0.4 per cent in the first quarter of this year compared to the last quarter of 2017, and by 2.5 per cent year on year, EU statistics agency Eurostat said last week. Eurostat’s preliminary estimate was in line with economists’ forecasts, but fell well short of the 0.7 per cent quarterly rises seen in the previous three quarters.

The growth rate pushed the eurozone’s growth rate below that of the United States, but still ahead of Britain’s, which saw the weakest growth since 2012.

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