Monetary policy

Still no clarity as the banking crisis adds to the difficulty of predicting an economy still feeling COVID impacts and uncertainty about the prospects for a recession.

Federal Reserve Bank of St. Louis President James Bullard said he favored continued interest-rate hikes to counter persistent inflation, while recession fears are overblown.

Richmond Federal Reserve Bank President Thomas Barkin said he wants to see more evidence that U.S. inflation is easing back to the central bank's goal of 2%.

Federal Reserve Governor Christopher Waller said he favored more monetary policy tightening to reduce persistently high inflation, although he said he was prepared to adjust his stance if needed if credit tightens more than expected.

Federal Reserve policymakers scaled back their expectations for rate hikes this year after a series of bank collapses roiled markets last month, and stressed they would remain vigilant for the potential of a credit crunch to further slow the economy, a record of the meeting showed.

Outflows continued as Refinitiv Lipper reported $427.082 million was pulled from municipal bond mutual funds in the week that ended Wednesday after $461.123 million of outflows the week prior.

"In short, it appears that the end of the current tightening cycle is coming into view," said Wells Fargo Securities Chief Economist Jay Bryson.

Members of the Fed learned the wrong lesson from bizarrely focusing on the 1970s when they said "If history has taught us anything, it's to not let up too soon on inflation."

The reverberations from the Silicon Valley Bank and Signature Bank failures make the outcome of this week's Federal Open Market Committee meeting unpredictable.

The recent bank failures have changed market thinking about the Federal Reserve's next move.

Disruptions and dislocations associated with more volatile business cycles have already created opportunities for active fixed income management, as the dramatic interest rate increase of 2022 illustrates.

The Federal Reserve said further interest-rate hikes would be required to restore price stability.

Federal Reserve Bank of Atlanta President Raphael Bostic called for continued interest-rate hikes to above 5% ensure that inflation returns to the central bank's target and doesn't reaccelerate in a pattern similar to the 1970s.

Central bankers must augment what they learn from incoming data with clues gleaned from the real economy and avoid putting too much weight on financial markets, said Federal Reserve Bank of Chicago President Austan Goolsbee.

Cleveland Fed President Loretta Mester said a bigger-than-expected rise in the central bank's preferred inflation gauge shows the need to keep raising interest rates.

Mohamed El-Erian says the financial markets are starting to doubt whether the Federal Reserve can bring inflation down to its 2% target.

The White House is narrowing its search for a nominee to become the next Federal Reserve vice chair, intending to swiftly replace Lael Brainard, who became President Joe Biden's top economic adviser this week.

Federal Reserve Bank of St. Louis President James Bullard said the U.S. economy is proving more resilient than expected and repeated his call for the central bank to keep raising interest rates.

Two of the Federal Reserve board's seven governors abstained from supporting the selection of former Obama aide Austan Goolsbee to become president of the Chicago Fed, according to a record of the vote.

"At this juncture, the incoming data have not changed my view that we will need to bring the fed funds rate above 5% and hold it there for some time," Mester said.