Policymakers at the Federal Reserve are still worried that inflation could flare up again, and are in no hurry to cut its key interest rate

Minutes of the Federal Reserve’s January meeting released Wednesday reinforced the message of recent speeches by Fed officials. The central bank’s policy committee doesn’t plan to cut the fed funds rate from its current 23-year high until officials see more evidence that it has been kept high enough for long enough to vanquish the steep cost-of-living increases of recent years.

The minutes shed some light on what Fed officials are thinking as they calculate when to stop pushing down inflation—and the economy—with high interest rates. The Fed’s campaign of anti-inflation rate hikes has raised borrowing costs on mortgages, credit cards, and other loans in an effort to reduce spending by businesses and individuals and get inflation down to an annual rate of 2%. 

As inflation has fallen steeply from the 9.1% high watermark it hit in the summer of 2022, members of the Federal Open Market Committee have begun talking about when to ease up on those high interest rates, lest the economy slows down so much it falls into a recession.

Recent reports on rapidly cooling inflation had spurred speculation that the Fed could begin cutting as early as March, but financial markets are now mostly betting the first cut will come in June, according to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data. The meeting minutes confirmed the conservative outlook, and stocks dipped Wednesday afternoon after their release.

Crucially, that meeting took place before the recent report from the Bureau of Labor Statistics showed inflation remained more stubborn in January than economists had forecast, which could further discourage an early rate cut. 

“Policymakers believe the risk of cutting rates too soon remains greater than the risk of waiting too long,” Matt Colyar, an economist at Moody’s Analytics, wrote in a commentary. “Inflationary data released since January’s FOMC meeting has likely strengthened their resolve.”