[WASHINGTON] Federal Reserve policymakers decided to raise interest rates last month after almost all of them gained confidence inflation was poised to rise, but some voiced worries inflation could get stuck at dangerously low levels.
"Nearly all participants were now reasonably confident inflation would move back to 2 per cent over the medium term," the minutes of the Fed's Dec 15-16 meeting released on Wednesday said.
But "some members said that their decision to raise the target range was a close call, particularly given the uncertainty about inflation dynamics."
The minutes cast light on the fissures that remain in the US central bank despite a unanimous decision from policymakers last month to raise rates by a quarter point from near zero, the first increase in a decade.
The debate over the outlook for inflation will be central to decisions on how quickly to raise rates over the next year.
The move to hike in December while promising a gradual path of future increases was a compromise between policymakers who had been ready to raise rates for months and those who feel the economy is still at risk from weak inflation and slow global growth.
Fed policymakers generally expect four quarter-point rate hikes in 2016, but the minutes made clear that some officials will be wary of further increases if higher inflation does not materialise, and all agreed that persistently low inflation was a worry.
"Because of their significant concern about still-low readings on actual inflation and the uncertainty and risks present in the inflation outlook, they agreed to indicate that the Committee would carefully monitor actual and expected progress toward its inflation goal," the Fed said in the document.
Inflation has been below the Fed's target for most of the last three years, raising concerns that another recession could tip the economy into a debilitating spiral of falling prices and wages.
The minutes also detailed the virtues policymakers see in raising rates at a gradual pace.
Policymakers said a gradual path of hikes would keep policy stimulus in place for longer, while giving them more time to confirm inflation was on track to meet the Fed's 2 per cent target, according to the minutes.
Worries about turmoil in foreign financial markets helped convince the Fed to hold off on rate increases earlier in 2015, and the minutes showed lingering concerns about economic weakness in China, which has been a drag on global stock markets, including on Wednesday.
Policymakers worried "China could find it difficult to navigate the cyclical and structural changes under way in its economy", according to the minutes.