Weekly Update
May 4, 2026
Upcoming Events
Monday, May 4
Divisia Release
Williams Speaks at Cynosure Group Spring Symposium
Tuesday, May 5
Job Openings and Labor Turnover Survey Release
Quarterly Report on Household Debt and Credit Release
GDPNow Update
Bowman Speaks at Women in Housing and Finance Symposium
Barr Speaks at Magdalen College Event
Wednesday, May 6
Goolsbee Speaks at Milken Institute Global Conference
Thursday, May 7
Survey of Consumer Expectations Release
GDPNow Update
Williams Speaks at Mount Saint Mary College Event
Hammack Speaks at Ohio CEO Summit
Friday, May 8
Jobs Report Release
Surveys of Consumers Release
GDPNow Update
Goolsbee Speaks at Hoover Institution Monetary Policy Conference
Waller Speaks at Hoover Institution Monetary Policy Conference
Bowman Speaks at Hoover Institution Monetary Policy Conference
Cook Speaks at the Central Bank of West African States Conference
Recent News
Holding steady… As anticipated, the Federal Open Market Committee held its federal funds rate target in the 3.5 to 3.75 percent range at last week’s meeting. But the decisions was far from unanimous, with four members dissenting. Governor Stephen Miran preferred to cut the target rate. Regional Reserve Bank Presidents Beth Hammack (Cleveland), Neel Kashkari (Minneapolis), and Lorie Logan (Dallas) preferred to remove the easing bias in the FOMC’s post-meeting statement.
At the post-meeting press conference, Fed Chair Jerome Powell acknowledged that “Inflation has moved up recently and is elevated relative to our two-percent, longer-run goal.” He said the increase in headline inflation was due to “the significant rise in global oil prices that has resulted from the conflict in the Middle East,” whereas the high core inflation “largely reflects the effects of tariffs on prices in the goods sector.”
Hanging around… Powell also said he will not resign from his position as governor when his term as chair ends on May 15, but will instead stay on “for a period of time to be determined.”
When explaining his decision to stay, Powell cited “the series of legal attacks on the Fed” over the last year, which he said “threaten our ability to conduct monetary policy without considering political factors”:
[…] these legal actions by the administration are unprecedented in our 113-year history and there are ongoing threats of additional such actions. I worry that these attacks are battering the institution and putting at risk the thing that really matters to the public, which is the ability to conduct monetary policy without taking into consideration political factors. It is so important for our economy, for the people that we serve, that they can depend over time on a central bank that operates that way—free of political influence. It’s part of the absolute foundation of this amazing economy that we have. It’s just one of the many reasons why the US economy is the envy of the world. That piece of institutional architecture separates successful countries from unsuccessful countries. It is extremely important—not for the people who work at the Fed at any given time, but for the people that we serve—that the Fed remain able to conduct monetary policy in a way that doesn’t get pulled into politics, trying to help or hurt any particular politician or political party. It’s critical for the people that we serve.
Although Powell “had long planned to be retiring,” he said recent events had left him “no choice but to stay until I see them through—at least that long.”
I welcomed the announcement last Friday by the US Attorney for the District of Columbia that she had closed the criminal investigation. She also noted, however, that she would not hesitate to restart the investigation. Over the weekend the Department of Justice provided assurances that they will not reopen the investigation unless there’s a criminal referral from the Fed’s inspector general. And, absent such a referral, if they do appeal the recent court decision, they would not seek, as part of that appeal, to restart the investigation or send new subpoenas. I've said that I will not leave the board until this investigation is well and truly over, with transparency and finality, and I stand by that.
Powell said he was “encouraged by recent developments” and would be “watching the remaining steps in this process carefully.”
Solid growth… Real gross domestic product (GDP) grew at a continuously compounding annualized rate of 2.0 percent in 2026:Q1, according to the first estimate from the Bureau of Economic Analysis released last week. It has grown 2.6 percent over the last year. For comparison, real GDP grew at a continuously compounding annualized rate of 2.5 percent over the five-year period just prior to the pandemic.
The Atlanta Fed currently estimates real GDP will grow at an annualized rate of 3.5 percent in 2026:Q2. In March, the median FOMC member projected 2.4 percent real GDP growth this year.
Prices… Inflation surged in March, according to the latest data from the Bureau of Economic Analysis. The Personal Consumption Expenditures Price Index (PCEPI) grew at a continuously compounding annualized rate of 7.9 percent in March 2026, up from 4.5 percent in the prior month. It has averaged 4.2 annualized growth percent over the last six months and 3.4 percent over the last year.
Core inflation, which excludes volatile food and energy prices, also remained elevated. Core PCEPI grew at a continuously compounding annualized rate of 3.5 percent in March 2026, down from 4.4 percent in the prior month. It has averaged 3.6 percent annualized growth over the last six months and 3.2 percent over the last year.
As the difference between headline and core PCEPI inflation suggests, much of the observed increase in inflation in March is related to the ongoing conflict in the Middle East, which has pushed up energy prices. The price index for energy goods and services grew at a continuously compounding annualized rate of 131.3 percent in March 2026, up from 9.4 percent in the prior month. (That’s not a typo.) It has averaged 23.2 percent annualized growth over the last six months and 13.5 percent over the last year.