"Almost all participants remarked that while the incoming data regarding inflation were encouraging, additional information was needed to provide greater confidence that inflation was moving sustainably toward the Committee's 2 percent objective before it would be appropriate to lower the target range for the federal funds rate," said the Federal Open Market Committee, the central bank's policy-setting body.
"Nevertheless, participants viewed the incoming data as enhancing their confidence that inflation was moving toward the Committee's objective," said the minutes. "The vast majority observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting."
Factors such as a continued waning of pricing power, moderating economic growth, and the runoff in excess household savings accumulated during the pandemic -- which had contributed to recent disinflation -- would likely continue to put downward pressure on inflation in coming months, the minutes said.
Participants also noted that real gross domestic product (GDP) growth was solid in the first half of the year, though slower than the robust pace seen in the second half of last year.
The Fed's latest minutes were released a few hours after the U.S. Labor Department reported that monthly payroll data had overestimated job growth by approximately 818,000 over the 12 months ending in March, signaling a weaker labor market than previously reported.
The Chicago Mercantile Exchange Group's FedWatch Tool, which acts as a barometer for the market's expectation of the Fed funds target rate, showed that the probability of the Fed cutting rates by 25 basis points at the September meeting is 62 percent as of Wednesday night.
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