Fed Is Whetting Appetite for a Half-Point Rate Hike: Eco Week

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Investors in the coming week will parse minutes of the Federal Reserve’s March meeting to gauge central bankers’ appetite for a half percentage point increase in interest rates next month.

Wednesday’s minutes will provide key details of the likely path forward on shrinking the Fed’s balance sheet. Fed Chair Jerome Powell said the plan will be laid out pretty clearly, hinting that policy makers debated an approach and came down in its favor.

New York Fed President John Williams said Saturday that a “sequence of steps” can get rates back to more normal levels to curb inflation. Mary Daly, president of the San Francisco Fed, said in an interview published on Sunday that rising inflation and a tight labor market strengthen the case for a half-point hike in May.

The last time they shrank the balance sheet, the Fed set caps allowing holdings to…