Fed worries about cutting rates too soon but remains concerned about the downside risk to the economy – FOMC minutes

The minutes of US the Federal Reserve’s Federal Open Market Committee last policy meeting showed that policymakers remain concerned about the risks of cutting interest rates too soon, but also pointed to uncertainty about how long interest rates should remain at their current level, to push inflation to central bank’s 2% target.

The majority of policymakers were against too quick policy easing, while some were more concerned about growing downside risk to the economy if the central bank keeps rates unchanged for longer period, despite the latest positive economic data which suggest that the economy is still resilient.

Fresh rise in consumer prices in January, driven by persistent price pressures in services industry and housing, was seen as a warning, although core inflation was unchanged, but remains elevated and still well above the target, which requires cautious approach.

The Fed kept its interest rates at 5.25%-5.50% range for a couple of months and signaled start of easing later this year, but also said that they need to be confident that inflation is falling towards the target before starting to cut rates.