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News of the day on 22.05.2015

The most important data of this Friday is the consumer price index of the USA for April. This index is the important aspect for evaluating inflation rate in the country and it also shows the changes in the level of retail prices for a certain “basket” of products and services. It is expected that in April inflation in the US will rise only by 0.1%, which is worse than the previous index of 0.2%. On annual basis the index will remain negative at the level of -0.1%, which suggests the beginning of deflation in the American economy. If this forecast is correct, the American currency will be under strong pressure. Note that most of the world economies are facing the problem of the low inflation rate, so the USA is not an exemption. The consumer price index in the USA has been declining for over a year and is unlikely to reach the target level of 2.0%, set by the US Fed.  In the circumstances of the low inflation the American regulator cannot initiate the long-awaited increase in the interest rate, as this decision will cause further strengthening in the USD and the decline in the consumer price index. Therefore, the regulator’s officials have to postpone the increase of the interest rate for the later time. 

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