2024.02.2118:26:00UTC+00Fed Officials Wary Of Cutting Rates 'Too Quickly,' Minutes Reveal

With risks to the outlook for inflation still seen as tilted slightly to the upside, the minutes of the Federal Reserve's latest monetary policy meeting revealed most officials remain wary of cutting interest rates "too quickly."

The minutes of the late-January meeting said participants acknowledged risks to achieving the Fed's employment and inflation goals were moving into better balance, but they remained highly attentive to inflation risks.

"In particular, they saw upside risks to inflation as having diminished but noted that inflation was still above the Committee's longer-run goal," the Fed said.

Most participants subsequently highlighted the risks of moving "too quickly" to lower interest rates and emphasized the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to the Fed's 2 percent target.

However, the Fed said a couple of participants pointed to downside risks to the economy associated with maintaining an overly restrictive stance for too long.

The Fed announced following the January 30-31 meeting that it had once again decided to maintain the target range for the federal funds rate at 5.25 to 5.50 percent.

The decision to leave rates unchanged came as the Fed acknowledged inflation has eased over the past year but said it remains elevated.

The central bank's statement notably removed the reference to "additional policy firming," although the Fed also said it does not expect it will be appropriate to lower rates until it has gained "greater confidence" that inflation is moving sustainably toward 2 percent.

The Fed's next monetary policy meeting is scheduled for March 19-20, with the central bank widely expected to once again leave rates unchanged.

Investors had previously been hoping the Fed would begin cutting rates next month, but according to CME Group's FedWatch Tool, the chances of a 25 basis point rate cut have fallen to just 6.5 percent.