Fed officials see 'upside risks' to inflation possibly leading to more rate hikes, minutes show

cnbc.com:

Federal Reserve officials expressed concern at their most recent meeting about the pace of inflation and said more rate hikes could be necessary in the future unless conditions change, minutes released Wednesday from the session indicated.

That discussion during a two-day July meeting resulted in a quarter percentage point rate hike that markets generally expect to be the last one of this cycle.

However, discussions showed that most members worry that the inflation fight is far from over and could require additional tightening action from the rate-setting Federal Open Market Committee.

«With inflation still well above the Committee's longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy,» the meeting summary stated.

That increase brought the Fed's key borrowing level, known as the federal funds rate, to a range targeted between 5.25%-5%, the highest level in more than 22 years. 

While some members have said since the meeting that they think the further rate hikes could be unnecessary, the minutes suggested caution. Officials noted pressure from a number of variables and stressed that future decisions will be based on incoming data.

«In discussing the policy outlook, participants continued to judge that it was critical that the stance of monetary policy be sufficiently restrictive to return inflation to the Committee's 2 percent objective over time,» the document said.

Indeed, the minutes suggested considerable misgivings over the future direction of policy.

While there was agreement that inflation is «unacceptably high,» there also was indication «that a number of tentative signs that