Fed Policymakers Fear Early Rate Rise Will Cool Recovery

- US Federal Reserve (Fed) policymakers raised concern over early interest rate hike could pour cold water on the economic recovery, according to the minutes from the Fed's January 27-28 policy-setting meeting.

Fed officials emphasized the impact that low inflation measures were having on the central bank's confidence in moving ahead with the rate hike plan, the minutes from the Federal Open Market Committee meeting showed.

Fed officials agreed that US economic growth was strengthening and Fed can move ahead with raising rates, but raising the rates soon, which was previously stated as June, would halt tphe positive development, the minutes showed.

"Several participants saw the continuing weakness of core inflation measures as a concern," the minutes said, detailing the Fed's internal debate over the conflicting signals sent by different measures of inflation expectations.

The Fed repeated in January that it would be "patient" in deciding when to raise benchmark borrowing costs from zero and acknowledged a decline in certain inflation measures.

"Many participants observed that a premature increase in rates might damp the apparent solid recovery in real activity and labor market conditions, undermining progress toward the committee's objectives," the minutes said.