As banking jitterbug dies down Fed returns to its main dance partner

WASHINGTON, April 3 (Reuters) – Federal Reserve officials, increasingly confident they have nipped a potential financial crisis in the bud, now face a difficult judgment on whether demand in the U.S. economy is falling and, if so, whether it is coming down fast enough to lower inflation. If the U.S. central bank’s policy meeting two weeks ago was dominated by concern that a pair of bank failures risked broader financial contagion – a potential reason to pause further interest rate increases – debate has quickly refocused on whether tighter monetary policy has started to show its impact on the broader…