Federal Reserve officials indicated that there were “upside risks” to inflation in their most recent meeting, raising the possibility of additional rate hikes, according to minutes of the meeting released Wednesday.
The Fed voted unanimously to keep the central bank’s benchmark interest rate steady at a range of 2.25% to 2.50% at the Jan. 29-30 meeting, as widely expected.
The minutes of the meeting showed that several official discussed the potential impact of rising prices and a strong labor market. However, inflation has remained below the Fed’s target of 2%.
The minutes noted that some officials were concerned that global economic developments — such as weakening growth overseas and further monetary policy easing in China — could lead to a softening in the outlook for U.S. inflation.
At the same time, however, several officials highlighted the risk that the U.S. economy could become overheated. This could lead to higher than expected inflation, which could prompt the Fed to raise rates further to avoid an overheating economy.
Overall, officials thought that the economy is likely to remain strong and that inflationary pressures should remain contained in the near term. At the same time, they noted that further rate hikes may be warranted if economic conditions boost inflation.
