Most Federal Reserve officials cautioned against cutting rates too quickly at their last policy meeting as they continue to look for convincing evidence that inflation is returning to their 2% target, according to the minutes from the Jan. 31 discussion released Wednesday.
"Participants highlighted the uncertainty associated with how long a restrictive monetary policy stance would need to be maintained," the minutes said.
Most "noted the risks of moving too quickly to ease the stance of policy and emphasized the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to 2 percent."
Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards
The minutes offer new insight into a closed-door conversation where the Fed's Federal Open Market Committee decided to hold the benchmark interest rate steady, keeping it at its highest level since 2001 after an aggressive campaign to cool inflation.
The minutes showed central bank officials felt that significant progress had been made on inflation, and that they expected core non-housing services inflation to gradually decline further as the labor market continued to move into better balance and wage growth moderated.
At the same time, officials said that inflation was still well above target and that they would be careful in judging whether inflation was moving down sustainably toward 2%. Several officials mentioned financial conditions were or could become less restrictive, which could cause progress on inflation to stall.
These discussions came before a series of new readings on inflation and the US economy that were hotter than expected.
The latest signal came Friday when the Labor Department said its Producer Price Index — which tracks the prices businesses pay to manufacture products and services — exceeded forecasts from December to January.
The Consumer Price Index in January also was also hotter than economists expected.
Fed Chair Jerome Powell and other Fed officials have been urging caution about the pace of rate cuts in the days and weeks following the last meeting on Jan. 31, dashing investor hopes that cuts could begin as early as March.
Boston Fed President Susan Collins and Cleveland Fed President Loretta Mester predicted cuts would likely happen "later this year," while Atlanta Fed President Raphael Bostic pegged the timetable as "summer time," in the third quarter of the year.
Expectations for the first rate cut have now been pushed back to June.
Richmond Fed President Tom Barkin on Wednesday said the new consumer and wholesale price reports "made things harder."
"It definitely did not make things easier," he added in an interview with Sirius XM.
The Fed minutes released Wednesday showed that officials viewed the job market as strong, but several members also noted that recent job gains were concentrated in a few sectors. That, in their view, pointed to downside risks to the outlook for employment.
Still, officials viewed the risks of trying to bring down inflation coupled with maintaining full employment were coming into better balance.
There was also a discussion on Jan. 31 about the Fed's quantitative tightening program — or the process by which it allows Treasuries and mortgage-backed securities to mature and roll off its balance sheet.
Some members said that since there’s uncertainty around what the estimate of ample reserves are it would be prudent to slow the pace at which securities are rolling off to create a smooth transition to eventually stop the roll-offs.
A few members thought that the process of balance sheet runoff could continue for some time even after the Fed begins lowering rates.
Click here for in-depth analysis of the latest stock market news and events moving stock prices.
Read the latest financial and business news from Yahoo Finance