CPI Rise May Set Tone for Fed Meeting

The economy’s marquee event this week will be Tuesday’s meeting of the Federal Open Market Committee of the Federal Reserve, the panel that sets U.S. monetary policy, Until last week analysts had little reason to expect much action at the meeting but a government report released Friday showed the largest one-month increase in U.S. consumer prices in almost a decade--a 0.7% jump in the consumer price index for April. The numbers “raise the probability that they will move to a tightening bias,” said Tim O’Neill, chief economist at Harris Bank/Bank of Montreal in Toronto. Sixteen of the 30 top bond-trading firms surveyed by Bloomberg News expect the Fed policymakers to adopt a “bias,” rather than an actual move, to raise rates, if need be, some time over the next few months. If they do set a bias, they may announce it after the meeting under a new policy decided in December aimed at revealing important shifts in members’ views. Previously, bias changes had been revealed only when minutes of an FOMC meeting were released weeks later.