Comment on Fed minutes: Officials back reducing bond holdings this year

WASHINGTON — Federal Reserve officials signaled in discussions early this month that they would likely start reducing the Fed’s huge portfolio of bond holdings later this year, a step that could cause borrowing rates to rise. At the same time, the Fed appears to be on track to resume raising its key short-term interest rate when it next meets in mid-June. The minutes of the Fed’s May 2-3 meeting, released Wednesday, show that officials not only discussed beginning a reduction of bond holdings this year but also expressed approval for a plan on how the bond sales should proceed. The Fed would set a cap on the size of maturing bonds to be sold each month and a schedule for gradually raising the cap.