Federal Reserve Chair Jerome Powell said the central bank is adjusting its policy framework due to changes in inflation and interest rates since 2020. The Fed’s review, which started this year, isn’t likely to influence how the central bank is currently setting interest rates; results are expected by August or September. And the Bank of Mexico extended its string of half percentage-point interest-rate cuts, in line with expectations, and said further reductions of that size could be considered at future meetings.

Federal Reserve Chair Jerome Powell said the central bank was in the process of making adjustments to its overarching policy-setting framework to account for meaningful changes in the outlook for inflation and interest rates following the 2020 pandemic.

“The economic environment has changed significantly since 2020, and our review will reflect our assessment of those changes,” Powell said Thursday.

Factory-gate prices fell unexpectedly last month, due to a decline in services prices. The producer-price index dropped by a seasonally adjusted 0.5% in April, the Labor Department said Thursday. Economists polled by The Wall Street Journal had expected the overall index to rise by 0.3%.

Factory activity in New York State continues to slow amid signs of a weaker labor market and rising prices, according to a monthly survey. The Federal Reserve Bank of New York said Thursday that its statewide manufacturing index declined slightly to minus 9.2 this month from minus 8.1 in April, a change in line with economists' expectations. There were signs of a rebound in demand as new orders turned positive from a month earlier, and shipments also increased slightly. But firms in the state continue to expect conditions to worsen in the months ahead, the survey showed. (Dow Jones Newswires)

• Canada existing home sales, prices decline in April. Canadian existing-home sales fell slightly in April while home prices dropped at a faster pace, as economic uncertainty continues to dissuade consumers from making big purchases. The Canadian Real Estate Association said existing-home sales fell 0.1% in April from March, and that sales activity—on an unadjusted basis—fell nearly 10% from a year ago. The level of housing inventory held steady in April at 5.1 months, or the most available on the market since the early months of the Covid-19 pandemic. (Dow Jones Newswires)

• Dovish BOJ board member calls for pause in rate hikes on tariff concerns. Bank of Japan policy board member Toyoaki Nakamura said the central bank should pause monetary tightening, as higher tariffs could hurt the nation's virtuous cycle of income, spending and inflation. "As the impact of U.S. tariff policies is currently a widely shared concern, it is necessary to carefully gauge developments in corporate profits, business fixed investment, wage hikes and other factors," he said in a speech Friday in Japan's southern prefecture of Fukuoka. "I believe it is appropriate for the bank to maintain its current monetary policy for the time being." (DJN)

• EU Wants More in U.S. Trade Deal Than U.K. or China Got
• Eurozone Grew More Weakly Than Thought at Start of 2025
• U.K. Economy Raced at Start of Year But Slowdown Looms

Her confirmation, which could move forward this month in the Senate, represents a defining moment in the broader fight over the future of financial regulation, and would be an important win for advocates of lighter bank regulation. (Barron's)

8:30 a.m.: Import & Export Price Indexes
8:30 a.m.: New Residential Construction - Housing Starts and Building Permits
10 a.m.: University of Michigan Survey of Consumers - preliminary
4 p.m.: Treasury International Capital Data
6 p.m.: Federal Reserve Bank of Richmond President Thomas Barkin delivers Vance-Granville Community College commencement address
9:45 p.m.: Federal Reserve Bank of San Francisco President Mary Daly gives College of Western Idaho commencement address

10 a.m.: Quarterly Retail E-Commerce Sales
10 a.m.: Leading Indicators

Fed officials are spending much of Thursday and Friday at a Washington, D.C. research conference where they are hearing from leading policy experts as part of their five-year framework review. There is no shortage of suggestions for how the central bank should adjust its approach to its dual mandate of price stability and maximum employment, along with plenty of constructive criticism of the Fed's current framework, which dates from 2020. The conference's initial panels have focused on how the Fed should approach measuring its success at achieving "maximum employment" and the role that expectations of future inflation plays in determining how inflation evolves. A frequent theme among speakers: Why inflation spiked so far above the central bank's target in the early 2020s and how to avoid future episodes. — Matt Grossman

The Fed's preferred gauge of core inflation is likely on track to fall to its lowest level since 2021 in April data. Economists are using figures from this week's consumer- and producer-price data from the Labor Department to estimate the April change in the personal-consumption-expenditures price index, the inflation rate that the Fed targets. Excluding volatile food and energy prices, core 12-month PCE inflation likely fell to 2.5% in April, down from 2.6% in March, economists at Pantheon Macro and Capital Economics independently estimate. That would be the lowest reading since March 2021, just before the pandemic-era inflation spike kicked off in earnest. Official PCE inflation data land May 30.  — Matt Grossman

• New Zealand's manufacturing sector activity continued to grow, supported by falling borrowing costs and signs the domestic economy is still in a broad recovery. The BNZ BusinessNZ performance of manufacturing index for April was 53.9, up from 53.2 in March. (Dow Jones Newswires)
• Global oil demand growth is expected to be stronger than previously anticipated due to lower oil prices and a less severe hit of U.S. tariffs on the economy, the International Energy Agency said.
• The Organization of the Petroleum Exporting Countries trimmed its economic growth outlook but struck a cautiously optimistic tone on trade developments, keeping its oil demand forecast steady as it prepares to accelerate production.

WSJ Pro Central Banking brings you central banking news, analysis and insights from WSJ’s global team of reporters and editors. This newsletter was compiled by markets reporter Vicky Ge Huang in New York. Send your tips, suggestions and feedback to vicky.huang@wsj.com.