The minutes of the Fed's January 27-28 meeting said several participants felt further rate cuts would likely be appropriate if inflation were to decline in line with their expectations.

However, others believed it would likely be appropriate to leave rates unchanged for "some time" as the Fed carefully assesses incoming data.

A number of these participants judged that additional policy easing may not be warranted until there was clear indication that the progress of disinflation was firmly back on track, the Fed said.

The Fed noted several participants even supported a two-sided description of the outlook for rates, reflecting the possibility that rate increases could be appropriate if inflation remains at above-target levels.

"All participants agreed that monetary policy was not on a preset course and would be informed by a wide range of incoming data, the evolving economic outlook, and the balance of risks," the Fed said.

Following the late January meeting, the Fed announced its widely expected decision to leave rates unchanged following on the heels of three straight interest rate cuts to close out 2025.

The Fed said it decided to maintain the target range for the federal funds rate at 3.50 to 3.75 percent following three consecutive quarter point rate cuts.

As with other recent decisions, the choice to leave rates unchanged was not unanimous, as Fed Governors Stephen I. Miran and Christopher J. Waller preferred cutting rates by another quarter point.

The minutes revealed those who favored leaving rates unchanged generally viewed the current stance of monetary policy was within the range of estimates of the neutral level following last year's rate cuts.

"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," the Fed said.

Meanwhile, the Fed said those who preferred cutting rates expressed concerns that the current stance of the policy rate was still meaningfully restrictive and viewed downside risks to the labor market as a more prominent policy concern than the risk of persistently elevated inflation.