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NAFCU Chief Economist and Director of Research Curt Long said yesterday that the Federal Open Market Committee appears ready to increase the federal funds target rate in June, judging from the committee's May meeting minutes.

"The Fed appears poised for a rate hike in June," Long said. "First-quarter weakness was brushed aside, and committee participants believe the economy is continuing to show gradual improvement warranting another increase in interest rates."

The meeting minutes also included a plan to reduce the size of the Fed's balance sheet as the committee indicated it would do this year. That plan would involve setting limits on amounts to reinvest from maturing securities. Those limits would be adjusted quarterly according to a set schedule, thereby allowing the balance sheet to shrink gradually and predictably.

"The Fed will likely release its schedule for tapering ahead of time in order to prepare markets, and then begin reducing reinvestment of principal near the end of the year," Long said.

The minutes indicate that committee members' assessments of the economy haven't changed much since their March meeting.

The FOMC's next policy setting session is scheduled for June 13-14.

The committee's revised projections are three quarter-point rate hikes in 2017, three in 2018 and three to four in 2019.