Fed minutes may give hint on March hike

Fed minutes may give hint on March hike

International News

Since Federal Reserve Chair Janet Yellen told Congress last week that a March interest rate hike is at least on the table, the search is on for clues as to whether the Fed is likely to make a move that soon. Minutes of the Fed’s early February meeting, out this week, will be Exhibit A. A light week of economic news also features reports on new and existing home sales. Although Yellen didn’t tip her hand in testimony before the Senate banking committee, she did say that “every meeting is live,” including the Fed’s next gathering March 14-15. Investors remain complacent, with fed fund futures giving just 17% odds of a rate increase in March and 47% in June. But some encouraging economic data last week increased the chances of Fed action, economists say, including strong pickups in inflation and retail sales. The Fed raised its benchmark short-term rate in December for the first time in a year. Minutes of the Jan. 31-Feb 1 meeting, out Wednesday, could signal if another move is imminent. Many economists also expect the meeting summary to reveal a discussion among Fed policymakers about when to start shrinking the Fed’s bloated balance sheet. During and after the financial crisis, the Fed bought more than $3 trillion in Treasury bonds and mortgage-backed securities to push down long-term interest rates. Now that the economy is healthy enough to begin raising short-term rates, some Fed policymakers believe the next step is to shrink the Fed’s holdings, though Yellen last week gave no hint that’s coming soon.