US Fed minutes show wariness over further rate cuts

US Federal Reserve officials appeared surprisingly wary of cutting interest rates when they met in January, with several even suggesting the central bank may need to raise rates if inflation remains stubbornly high.

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While the minutes of the Jan 27-28 policy meeting, released on Feb 18, fell far short of suggesting most officials were contemplating rate increases, they made clear the Fed is shifting further away from agreeing on another cut.

That could put it on a collision course with US President Donald Trump and complicate the task of his nominee for Fed chair, Mr Kevin Warsh.

Mr Trump has repeatedly said he wants the next Fed chief to deliver lower interest rates, and on Jan 30, two days after the policy meeting, he announced he would nominate Mr Warsh, a former Fed governor, to take over when Mr Jerome Powell’s tenure as chair ends in May.

“The minutes carry a distinctly more hawkish tilt,” Mr Gregory Daco, chief economist at EY-Parthenon, wrote in a note to clients. “This sets up an interesting dynamic if and when Kevin Warsh is confirmed as Fed chair.”