"Some participants indicated that, once the policy rate had reached a sufficiently restrictive level, it likely would be appropriate to maintain that level for some time," the Fed said in the minutes of its July 26-27 meeting where it referred to participants from its policy-making Federal Open Market Committee (FOMC).
But the Fed also said that FOMC members were wary of overdoing rate hikes and felt that slowing rate hikes may be appropriate during softer economic conditions.
"Downside risks included the possibility that a further tightening in financial conditions would have a larger negative effect on economic activity than anticipated as well as the possibilities that the Russian invasion of Ukraine and the COVID-related lockdowns in China would have larger-than-expected effects on economic growth," the central bank added.
The Fed has carried out four rate hikes since March, bringing key lending rates from nearly zero to as high as 2.5% by July.
Inflation, as measured by the Consumer Price Index (CPI), however, remains at more than four times the central bank’s annual target of 2%. The CPI grew at 8.5% during the year to July. Prior to that, the CPI expanded at its fastest pace in four decades, growing 9.1% during the year to June.
Traders are betting that the Fed will raise rates by just 50 basis points at its next meeting in September, versus bets previously for a 75 basis-point hike.