A "substantial majority" of policymakers at the Federal Reserve's meeting early this month agreed it would "likely soon be appropriate" to slow the pace of interest rate hikes as debate broadened over the implications of the U.S. central bank's rapid tightening of monetary policy, according to the minutes from the session.
The readout of the Nov. 1-2 meeting, at which the Fed raised its policy rate by three-quarters of a percentage point for the fourth straight time, showed officials were largely satisfied they could move rates in smaller, more deliberate steps as the economy adjusted to more expensive credit and concerns about "overshooting" seemed to increase.
"A slower pace ... would better allow the (Federal Open Market) Committee to assess progress toward its goals of maximum employment and price stability," said the minutes, which were released on Wednesday. "The uncertain lags and magnitudes associated with the effects of monetary policy actions on economic activity and inflation were among the reasons cited."
More important than the size of coming rate increases, the minutes noted, was an emerging focus on just how high rates will need to rise to lower inflation - and the need to calibrate that carefully in coming months.
"With monetary policy approaching a sufficiently restrictive stance, participants emphasized that the level to which the Committee ultimately raised the target range ... and the evolution of the policy stance thereafter, had become more important considerations ... than the pace," the minutes stated.
That ultimate landing spot for policy will hinge heavily on the path of inflation in coming months, and whether recent lower-than-expected readings become an established trend down.