Fed’s Powell Could Seal Expectations of Half-Point Rate Rise in May

Mr. Powell is scheduled to participate in a panel discussion hosted by the International Monetary Fund, where he is set to be joined by European Central Bank President Christine Lagarde.

Mr. Powell last month signaled half-point rate increases were possible at the Fed’s coming policy meetings, and since then, his top lieutenants on the central bank’s rate-setting committee have cemented expectations in interest-rate future markets of a half-point rate increase at the May gathering.

The Fed raised rates from near zero by a quarter-percentage point at its meeting last month, its first rate increase in more than three years. Fed officials including governor Lael Brainard, who is awaiting Senate confirmation to serve as the central bank’s vice chair, have almost unanimously signaled a desire to raise rates expeditiously to a more neutral setting that no longer provides stimulus. New York Fed President John Williams last week said that a half-point rate rise in May was a “very reasonable option.”

A rate increase next month would mark the first time since 2006 that the central bank increased its policy rate at back-to-back meetings, and a half-point increase would be the first such move since 2000.

The Labor Department is set to report on April 29 on a widely watched measure of labor costs during the first quarter. Economists at JPMorgan Chase & Co. estimate a separate release by the Commerce Department of the Fed’s preferred inflation gauge, also due April 29, will show that core prices, which exclude volatile food and energy items, rose 5.3% over the year through March, down from their 12-month increase of 5.4% in February.

Write to Nick Timiraos at [email protected]