Investing.com -- When the Federal Reserve last met in January, it acknowledged that uncertainty in global financial markets and concerns with inflation expectations compelled the U.S. central bank to leave its path for future interest rate hikes unchanged, the minutes from its January meeting showed on Wednesday.
Citing projections for weak economic growth and sluggish inflation projections, the Federal Open Market Committee held its benchmark Federal Funds Rate at a level between 0.25 and 0.50% last month. It came roughly one month after the FOMC abandoned a seven-year zero interest rate policy on December 16, by increasing the rate 25 basis points in a historic decision.
While the FOMC noted that conditions in U.S. labor markets, along with household spending and business fixed income had improved during the intermeeting period, the Fed expressed worries that the improvements were offset by disappointing U.S. manufacturing data and weak economic growth in China, among other concerns.
"Many participants indicated that their assessment of the balance of risks associated with the timing of the beginning of policy normalization had inclined them toward keeping the federal funds rate at its effective lower bound for a longer time," the minutes showed. "Some observed that, even with these risks taken into consideration, the federal funds rate may have already been kept at its lower bound for a sufficient length of time, and that it might be appropriate to begin policy firming in the near term."
Before the release, Federal Reserve Bank of Minneapolis president Neel Kashkari indicated on Wednesday morning that a March rate hike will still be on the table if the economy continued to grow moderately and inflation moved back toward the Fed's targeted goal of 2%. On Wednesday, the U.S. Department of Labor said its Producer Price Index (PPI-FD) for January rose 0.1%, exceeding expectations for a decline of 0.2%. The Core PPI, which strips out food and energy prices, increased by 0.6% on an annual basis, extending gains from December when it rose by 0.3% over the previous 12 months.
In its December projection, the FOMC estimated that long-term inflation will increase to 1.6% by the end of 2016, before increasing moderately a year later. Still, the FOMC said two months ago that it does not expect inflation to reach its 2% objective until the end of 2018.
“Since January, the data has been mixed. We’re going to keep watching the data and decide in March or beyond when is the right time to move”, Kashkari told CNBC.