The Fed also debated whether being more explicit in its post-meeting communication would avoid a worrying spike in long-term rates, though most participants said keeping to the meeting-by-meeting policy was best for now.
“Energy prices were no longer declining and most participants continued to expect that inflation would move up toward the committee’s 2 percent objective over the medium term,” the minutes said.
Out of 62 economists polled by Reuters, 50 expect the Fed to hike rates in the third quarter. Most policymakers have stuck to the mantra that the central bank will watch the data and assess on a “meeting-by-meeting” basis whether to raise rates, and have telegraphed September as a likely date for the first increase.
A recent pull-back in the strength of the dollar and higher oil prices both received attention in the minutes. A lower greenback and higher energy costs are key factors in moving inflation higher and prompting the Fed to bump up rates in tandem with rising prices across the economy.
The Fed has repeatedly said it will not raise rates until it is “reasonably confident” that prices are moving toward the central bank’s 2 percent target.
Some of that confidence appeared in the minutes, as it was noted that market-based inflation measures, while still low, had risen slightly.
“Some participants pointed out that, by some measures, the most recent monthly inflation readings had firmed a bit.”