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U.S. Federal Reserve officials “generally agreed” last month that the need for further interest-rate increases “had become less certain,” with several saying that the quarter-percentage-point increase they approved might be the last, according to minutes of the May 2-3 meeting released on Wednesday.

Others cautioned the U.S. central bank needed to keep its options open given the risks of persistent inflation.

“Several participants noted that if the economy evolved along the lines of their current outlooks, then further policy firming after this meeting may not be necessary,” the minutes said, adding weight to expectations the Fed is likely to pause its aggressive rate-hike campaign at the upcoming June 13-14 meeting.

Yet there was division about the path ahead.

With Fed staff continuing to project a mild recession later this year, some policy makers “saw evidence that the past year’s tightening was beginning to have its intended impact,” with “almost all participants” seeing risks to growth owing to a tightening of bank credit.

Yet “almost all” also saw upside risks to inflation, and “many participants focused on the need to retain optionality” to either hold rates steady or increase them. Some saw the need for further rate hikes as “likely.”

In addition, “some participants stressed that it was crucial” not to convey that rate cuts are likely or that rate increases “had been ruled out.”

The move last month to lift the central bank’s benchmark overnight interest rate by a quarter of a percentage point had “very strong across-the-board support,” Fed Chair Jerome Powell said in his postmeeting press conference three weeks ago, but also came with language in the policy statement that opened the door to holding rates steady from there.

The Fed shifted to a meeting-by-meeting approach after the May rate increase, perhaps pausing the rate hikes for a time at least to let the economy and financial system fully adjust to the rapid rises in borrowing costs of the past 14 months.

“Participants emphasized the importance of communicating to the public the data-dependent approach,” the minutes said of the Fed’s decision to change its policy guidance and open the door to a rate hike pause while also keeping open the possibility of further increases.

The 5.00-per-cent to 5.25-per-cent policy rate set by the Fed earlier this month matches the peak median rate anticipated by policy makers in the economic projections released by the central bank in March and last December.

New projections will be published at the end of next month’s meeting, but the most recent data have given little clarity about where the Fed’s inflation battle is heading and how fast. The pace of price increases is slowing, but only modestly, and the economy remains stronger than expected in key ways, particularly in terms of job and wage growth.

Yet there are also signs that the economy is cooling, and a bout of stress in the financial system has led to expectations of a tightening of credit for businesses and households.

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