The Federal Reserve is concerned about a slowdown in the global economy and turmoil in financial markets around the world, according to minutes of the organization’s latest meeting released Wednesday.
"Global financial market conditions deteriorated sharply in January, as recent developments in Chinese financial markets and the further decrease in crude oil prices appeared to increase concerns about global economic growth," the minutes of the Federal Open Market Committee's (FOMC) read.
The Fed increased its benchmark interest rate for the first time in almost a decade last December, while the market expected the central bank to have three or four more rate hikes this year.
However, not only did the Fed keep rates unchanged at its January meeting, the minutes revealed that the central bank has increased monitoring of the global economy and financial stability of foreign countries for its next rate hike decision.
"Members observed that if the recent tightening of global financial conditions was sustained, it could be a factor amplifying downside risks," the minutes said, and added "the turbulence in global financial markets evidently led investors to expect a more gradual increase in the target range for the federal funds rate than they had previously anticipated".
As for the U.S. domestic economy, some FOMC members stressed that an increase in inflation must be first seen, in order to make a decision to raise rates.
"A couple of members emphasized that direct evidence that inflation was rising toward 2 percent would be an important element of their assessments of the appropriate timing of further policy firming," according to the minutes.
Fed Chair Janet Yellen said last week that financial conditions are less supportive for U.S. economic growth, and the decision whether to move forward with interest rate hikes would depend on a broad range of indicators from the U.S. economy, as well as international developments.
She had remained hopeful and did not rule out a rate hike at the next FOMC meeting on March.