Several policymakers say they would opt to raise federal funds if inflation remains at above-target levels.

Federal Reserve officials renew worries over inflation with some policymakers suggesting the central bank may need to raise interest rates. Above, Federal Reserve Chairman Jerome Powell is seen in Washington. Cliff Owen - The Associated Press.

By ENDA CURRAN | BLOOMBERG

Federal Reserve officials signaled renewed worries over inflation with "several" policymakers suggesting the central bank may need to raise interest rates if inflation stays above their goal.

"Several participants" said they would have preferred a post-meeting statement that raised the possibility of raising the federal funds rate "if inflation remains at above-target levels," minutes of the central bank's Jan. 27-28 policy meeting, released Wednesday, showed.

While the minutes fell far short of suggesting most officials were contemplating the possibility of rate increases, they made clear the Fed is shifting further away from agreeing on another cut. And that could put it on a collision course with the man President Donald Trump has selected to be the next Fed chair.

Trump has repeatedly said he wants the next Fed chief to deliver lower interest rates, and on Jan. 30, two days after this policy meeting, he announced he would nominate former Fed Governor Kevin Warsh to take over when Jerome Powell's tenure as chair ends in May.

"The minutes carry a distinctly more hawkish tilt," Gregory Daco, chief economist at EY-Parthenon, wrote in a note to clients. "This sets up an interesting dynamic if and when Kevin Warsh is confirmed as Fed chair."

The minutes showed most of the Federal Open Market Committee believed last year's labor market weakness, which prompted the central bank to lower rates three times in late 2025, was fading by late January.

"The vast majority of participants judged that downside risks to employment had moderated in recent months while the risk of more persistent inflation remained," the minutes said.

That was before the release of a strong January employment report. Moreover, one group of policymakers at the meeting was embracing a view even more hostile to additional rate cuts.

"Several participants cautioned that easing policy further in the context of elevated inflation readings could be misinterpreted as implying diminished policymaker commitment to the 2% inflation objective," the record showed.

Still, another group of "several officials" remained open to more rate cuts if inflation declined as they expected, though most said inflation progress could be slower than generally forecast.

The FOMC voted 10-2 at its January meeting to hold the benchmark federal funds rate in a range of 3.5%-3.75%. Governors Christopher Waller and Stephen Miran dissented in favor of a quarter-point reduction. Officials dropped language pointing to increased downside risks to employment that had appeared in the three previous statements.