WASHINGTON (dpa-AFX) - Unless inflation declines, many Federal Reserve officials believe an increase in interest rates would likely be necessary, according to the minutes of the central bank's latest monetary policy meeting released on Wednesday.
The Fed said some participants also commented that financial conditions might not currently be sufficiently restrictive to facilitate a return of inflation to the 2 percent target.
At the same time, the minutes highlighted high uncertainty about the outlook for inflation due to in part to the recent re-escalation of the conflict in the Middle East.
'[Many] participants remarked that a protracted conflict could prolong supply chain challenges and could put upward pressures on inflation,' the Fed said.
Fed officials voted 9-3 to leave interest rates unchanged at the July 28-29 meeting, with Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan preferring to raise rates by a quarter point.
The Fed said the participants who favored raising rates judged that doing so would likely help forestall the need for a steeper and potentially more costly sequence of tightening moves at a later stage.
The minutes also revealed that various participants noted that their overall assessments of the economy were little changed given the short interval between the June and July meetings.
Fed Chairman Kevin Warsh subsequently observed that six scheduled meetings per year versus the current eight would allow more information to accumulate between meetings and provide policymakers and the staff more time to consider strategic monetary policy issues.
Warsh asked for input from officials on these issues, but no decisions regarding possible changes in the meeting schedule were made, the Fed said.
The Fed's next monetary policy meeting it scheduled for September 15-16, with CME Group's FedWatch Tool currently indicating a 65.4 percent chance rates will once again be left unchanged and a 34.6 percent chance of a quarter point rate hike.
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