Monetary policy

The Federal Reserve meeting May 2-3 will be closely watched for hints about what the FOMC's next move is. Join BNP Pariba U.S. Economist Yelena Shulyatyeva at 11 a.m. May 4 as she takes a look at the meeting and Chair Powell's press conference.

The Federal Reserve said that banks reported tighter standards and weaker demand for loans in the first quarter, extending a trend that began before recent stresses in the banking sector emerged.

Federal Reserve Bank of St. Louis President James Bullard said he thinks the U.S. central bank can still achieve a soft landing, with inflation returning to the Fed's 2% target without triggering a significant downturn.

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.