A majority of FOMC participants appear to be leaning away from rate cuts for now and were open to the possibility of rate increases, minutes of the April 28-29 meeting released Wednesday showed.
"Several participants highlighted that it would likely be appropriate to lower the target range for the federal funds rate once there are clear indications that disinflation is firmly back on track or if solid signs emerge of greater weakness in the labor market," the minutes said. "A majority of participants highlighted, however, that some policy firming would likely become appropriate if inflation were to continue to run persistently above 2%."
The FOMC voted to maintain its policy rate at the meeting, but three members dissented, favoring removal of the easing bias from the statement. Support for that position appeared broader than the three dissenting votes, given that participants judged the need for an upward rate adjustment had increased.
"To address this possibility, many participants indicated that they would have preferred removing the language from the postmeeting statement that suggested an easing bias regarding the likely direction of the committee's future interest rate decisions," the minutes said.
Participants generally agreed that the policy rate should remain unchanged for a period before either increases or decreases occur.
"With regard to the outlook for monetary policy, participants generally judged that the continued elevated inflation readings together with uncertainty related to the duration and economic implications of the Middle East conflict could necessitate maintaining the current policy stance for longer than previously anticipated," the minutes said.