The FOMC voted to hold rates at 3.5-3.75% at its January meeting, but pressure has been mounting from the White House to rapidly cut rates to allow cheaper borrowing.
Rate setters at the US Federal Reserve have not ruled out the need to raise interest rates as all members agreed that monetary policy “was not on a preset course”.
According to the Fed's minutes from its most recent meeting on 27-28 January, released on Wednesday (18 February), several members of the Federal Open Market Committee (FOMC) indicated support for "a two-sided description of the committee's future interest rate decisions".
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This reflected "the possibility that upward adjustments to the target range for the federal funds rate could be appropriate if inflation remains at above-target levels".
Deutsche Bank analysts said: "While that is still far from an active call to raise rates, it adds to the sense that most of the FOMC are in no rush to deliver further cuts."
According to the latest data from the US Bureau of Labor Statistics, inflation fell from 2.7% in the 12 months to December 2025 to 2.4% in the 12 months to January 2026.
The FOMC voted to hold rates at 3.5-3.75% at its January meeting, but pressure has been mounting from the White House to rapidly cut rates to allow cheaper borrowing.
Rate cuts would be "appropriate" if inflation declined in line with the FOMC's expectations, the minutes stated.
Despite this, "some participants commented that it would likely be appropriate to hold the policy rate steady for some time, as the committee carefully assesses incoming data, and a number of these participants judged that additional policy easing may not be warranted until there was clear indication that the progress of disinflation was firmly back on track".
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The US 10-Year Treasury note climbed slightly to just over 4.1% while the 2-Year also increased to just below 3.5%, according to data from MarketWatch.
Analysts from Deutsche Bank added: "The grind higher in rates was also supported by hawkish-leaning minutes of the January FOMC meeting."
While the minutes have focused on markets, AJ Bell's head of markets, Dan Coatsworth, noted that "the decision-making of the US central bank could be thrown up in the air when incoming new chair Kevin Warsh takes over from the incumbent Jerome Powell in May".
