The main points of interest in the May 8 week for the US are likely to be the cluster of reports on inflation – CPI on Wednesday, PPI on Thursday, and import prices on Friday – and the release of the Fed’s senior loan officer survey on Monday.

The loan officer survey is taken four times a year in January, April, July, and October. Its publication date is not part of the regular release calendar, but typically it is made public at 14:00 ET the Monday after the FOMC meeting at which it is presented. Chair Jerome Powell got a question about this survey at his May 3 press briefing in relation to the tightening of credit conditions associated with problems managing risk at some banks. Powell indicated that the report will be out this coming Monday. It is likely to be unusually interesting. The net percentage of domestic banks tightening standards for commercial and industrial lending has been climbing and was at levels consistent with recession in the last three reports. Another increase would confirm fears that conditions would weigh heavily on economic activity even if the US isn’t technically in a recession.

Powell didn’t receive as many questions about the inflation outlook last Wednesday as he has in more recent appearances. With the 25 basis point rate hike announced after the May 2-3 FOMC meeting concluded, most analysts expect the Fed to pause on further restricting monetary policy via higher interest rates while tighter credit conditions do the work of lowering demand and improving imbalances in the labor market. The inflation data have been more consistent in trending lower, although Powell warned that the path has been and will be choppy. Nonetheless, should the general easing trend for inflation continue – especially at the core and for non-housing services – it enhances the argument that monetary policy is sufficiently restrictive to get the job done in taming inflation if left in place to allow the “long and variable lags” to have their impact.

The April CPI report at 8:30 ET on Wednesday and PPI at 8:30 ET on Thursday will get most of the attention in terms of the outlook for inflation. Elsewhere, the data on air transportation services for April in the report on import and export price indexes at 8:30 ET on Friday should be able to confirm that one source of upward price pressures has eased significantly as the supply chain improved. Some businesses turned to air transport when other means of getting critical goods were too slow. The situation has righted itself and the costlier air transport services have subsided in use.

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