Federal Reserve officials signaled renewed worries over inflation with "several" policymakers suggesting the central bank may need to raise interest rates if inflation stays above their goal.
"Several participants indicated that they would have supported a two-sided description of the committee's future interest-rate decisions, reflecting the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation remains at above-target levels," a record of the central bank's January meeting showed.
Minutes of the Federal Open Market Committee's Jan. 27-28 meeting released Wednesday also revealed that a "vast majority of participants judged that downside risks to employment had moderated in recent months while the risk of more persistent inflation remained."
The FOMC voted 10-2 at the meeting to hold the benchmark federal funds rate in a range of 3.5%-3.75%. Governors Christopher Waller and Stephen Miran dissented in favor of a quarter-point reduction. Officials dropped language pointing to increased downside risks to employment that had appeared in the three previous statements.
The minutes further signaled that one group of policymakers was embracing a view less open to additional rate cuts, at least in the near term.
"Several participants cautioned that easing policy further in the context of elevated inflation readings could be misinterpreted as implying diminished policymaker commitment to the 2% inflation objective," the minutes said.
Several officials saw the likelihood for more rate cuts if inflation declined as they expected, though most said inflation progress could be slower than generally forecast.
Numbers published since the Fed's January meeting have signaled accelerating growth, slowing inflation and a stabilizing labor market. The consumer price index rose modestly in January, restrained by lower energy costs, according to Bureau of Labor Statistics. An underlying metric known as core CPI, which excludes food and energy, advanced as expected from a month earlier.
Payrolls rose in January by the most in more than a year and the unemployment rate unexpectedly fell, suggesting the labor market continued to stabilize at the start of 2026. Employers added 130,000 jobs and the unemployment rate declined to 4.3%, according to BLS data.
Since the January meeting, several Fed policymakers have maintained that an overall stable US economy provides them room to be patient in considering additional rate adjustments. President Donald Trump and other administration officials continue to call for the Fed to lower rates immediately.
Traders this year have eased back their expectations for when officials might next lower rates, though Fed funds futures contracts still suggest a cut is likely by June.