The US central bank has been battling to bring inflation down to its long-term two-percent target since the pandemic, with prices remaining persistently high.
In January, the Fed chose to keep interest rates steady – after three cuts in 2025 – citing robust economic growth and the risk of inflation.
“Several participants indicated that they would have supported a two-sided description of the Committee’s future interest rate decisions,” minutes from that meeting said.
This would have reflected “the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation remains at above-target levels.”
“Most participants” said that recent data also suggested “labour market conditions may be stabilising after a period of gradual cooling.”
US unemployment came in at 4.3 percent in January, remaining relatively steady as a result of drops in both labour supply and demand.
Participants saw the labour market further stabilising under “appropriate monetary policy,” but noted that the outlook for employment remained “uncertain.”
“The vast majority of participants judged that downside risks to employment had moderated in recent months while the risk of more persistent inflation remained, and some commented that those risks had come into better balance,” the minutes said.
Participants saw economic activity as “expanding at a solid pace,” but noted similar “high” uncertainty in the outlook for growth.
At January’s meeting, the Fed voted 10-2 to maintain rates at a range between 3.50 percent and 3.75 percent, in line with expectations.
Fed governors Stephen Miran and Christopher Waller both backed a quarter-percentage-point rate cut instead.
Looking ahead, all eyes will be on the policy signals from US President Donald Trump’s choice as the next central bank chief – Kevin Warsh – as chairman Jerome Powell’s term ends in May.
But first, Warsh will need to be confirmed by the US Senate, where he is set to face tough questions from lawmakers. (AFP)
Edited by Cecil Wong
