1. Fed Sees Half-Point Rate Hikes at the ‘Next Couple of Meetings. — minutes from the Fed’s May 3-4 meeting, at which the central bank raised interest rates by a half point to a range of 0.75%-1% and unveiled plans to begin reducing the size of its balance sheet, echoed an urgency to tackle inflation that Fed Chairman Jerome Powell said was a priority in his postmeeting press conference. But they also show that the Fed hopes to become more “data dependent” at future meetings amid an uncertain economic outlook. The Fed’s policy-making arm, the Federal Open Market Committee, meets next on June 14-15 and then July 26-27.
2. ECB Signals Delayed Bond Runoff, Diverging From Fed — the European Central Bank is likely to hold on to its mammoth portfolio of sovereign debt as it starts to raise interest rates, ECB officials said, underlining the fine line it is walking as it tightens monetary policy to battle inflation while trying not to weaken the bloc’s most fragile economies. The Fed, the ECB and other major central banks sucked up trillions of dollars of government and private debt during the pandemic to support financial markets and the economy. Now, investors are focusing on whether and how central banks unload those assets, which will have big repercussions for asset prices and bond yields.
3. US Home Sellers Cutting Prices Hits Highest Level Since 2019 — nearly one in five sellers dropped prices during the four week period ended May 22, Redfin Corp. said in a report Thursday. Other measures of how hot the market is, including a house’s time on market and the percentage of homes selling above listing price, have also plateaued. Consumers are contending with some of the highest mortgage rates in years, despite the dip in those figures in the past two weeks. Higher rates, coupled with economic uncertainty, are raising questions about whether the US housing boom has met its limit with signs emerging that the once-intense pace of the market could be decelerating.
4. Inflation Eased Slightly in April — Consumer prices rose 6.3% in April from a year earlier, down from 6.6% in March, as measured by the Commerce Department’s personal-consumption expenditures price index, which it reported Friday. The March rise was the fastest since January 1982. April’s reading was the first time the measure eased since late 2020. The so-called core PCE index—which excludes volatile food and energy prices—increased 4.9% in April from a year ago, down from 5.2% in the year through March. On a monthly basis, core prices rose a seasonally adjusted 0.3%, the same as in February and March. That pace marked a moderate slowdown from the average monthly pace for the previous four months. Minutes from the Fed’s May 3-4 meeting, released Wednesday, show that officials discussed the possibility that they would raise interest rates to levels high enough to slow economic growth deliberately as the central bank races to combat high inflation.

The week ahead — Economic data from Econoday.com:

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