The Federal Reserve on Wednesday released the minutes of its June monetary policy meeting, which revealed most participants generally agree the central bank is well positioned to wait for more clarity on the outlook for inflation and the economy before adjusting interest rates.
The Fed's "wait and see" approach comes as participants said economic growth and the labor market remain solid and described monetary policy as moderately or modestly restrictive.
However, the minutes revealed most participants believe some reduction in interest rates is likely to be appropriate this year.
Participants noted upward pressure on inflation from tariffs may be temporary or modest, that medium- and longer-term inflation expectations had remained well anchored, or that some weakening of economic activity and labor market conditions could occur.
A couple of participants said if incoming data evolves in line their expectations, they would be open to lowering interest rates at the next meeting later this month, the Fed said.
At the same time, the Fed said some participants saw the most likely appropriate path of monetary policy as involving no rate cuts this year.
Those participants noted recent inflation readings had continued to exceed the Fed's 2 percent goal, upside risks to inflation remained meaningful or that they expected that the economy would remain resilient, the minutes said.
Nonetheless, the Fed said participants agreed that although uncertainty about inflation and the economic outlook had decreased, it remained appropriate to take a careful approach in adjusting monetary policy.
The Fed announced its widely expected decision to leave interest rates unchanged following the June 17-18 meeting despite pressure from President Donald Trump to lower rates.
The central bank decided to maintain the target range for the federal funds rate at 4.25 to 4.50 percent in support of its dual goals of maximum employment and inflation at the rate of 2 percent over the longer run.
The decision came as the Fed noted swings in net exports have affected data but said recent indicators suggest that economic activity has continued to expand at a solid pace.
The Fed's next monetary policy meeting is scheduled for July 29-30.