Almost all Federal Reserve officials think interest rates are in a good place relative to an inflation backdrop that is easing yet still elevated and a job market that faces some risks but has moderated.
"Those who favored maintaining the target range generally viewed that, after the 75 basis point lowering of the target range last year, the current stance of monetary policy was within the range of estimates of the neutral level," the minutes of the January meeting said.
"They commented that maintaining the current target range of the federal funds rate at this meeting would leave policymakers well positioned to determine the extent and timing of additional adjustments to the policy rate."
Still, the FOMC remains divided on whether to focus on the threat of stronger price pressures or the prospect of renewed labor market deterioration, the minutes showed.
"In considering the outlook for monetary policy, several participants commented that further downward adjustments to the target range for the federal funds rate would likely be appropriate if inflation were to decline in line with their expectations," the report said.
At the same time, "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."
Recent data appeared to dovetail with the idea that officials will see no need to rush to lower rates further, especially as the January employment report came in firmer than expected, assuaging concerns about a possible job market downturn.
Inflation figures for last month also proved more tame than predicted, with CPI coming in at 2.4%, but the single month's improvement is not quite enough to give policymakers the green light for continued easing.
Two officials dissented against the decision to hold rates in January -- Governors Chris Waller and Stephen Miran both voted in favor of a quarter point cut. They argued policy is still overly restrictive and labor market risks remain more prominent.
The outlook for Fed policy this year is complicated by a leadership transition that raises uncertainty about the next chair's preferred course of action as expected nominee Kevin Warsh prepares to face the Senate confirmation process.
He will find a Fed committee that still faces significant divisions on the path forward for policy.
"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% percent inflation objective, perhaps making higher inflation more entrenched," the minutes said.
"By contrast, a few participants highlighted the risk that labor market conditions could deteriorate significantly while expressing confidence that inflation would continue to decline. These participants cautioned that keeping policy overly restrictive could risk further deterioration in the labor market."
President Donald Trump has repeatedly called on the Fed to cut rates and often chastises Chair Powell for not doing so more quickly.
