Fed minutes may offer hint on potential for March hike

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 said 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, economists say, including strong pickups in inflation and retail sales. 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.

Rising interest rates could modestly restrain a housing market that has been an economic bright spot. But while existing home sales hit a post-recession high last year, limited inventories have tempered gains. In December, home sales fell 2.8% amid a 3.6-month supply of homes, lowest since 2005, Nomura economist Lewis Alexander says. Yet pending home sales and mortgage applications have been solid recently, Alexander expects a rebound in home sales for January. Economists expect the National Association of Realtors to report a 1.1% rise in sales in January.

One reason existing home supplies have been skimpy is the inadequate construction of new homes, partly because of a labor shortage.

In December, new home sales fell 10.4%. Economists expect the Commerce Department on Fri

day to report a 7.3% increase in new home sales last month to a seasonally adjusted annual rate of 575,000.