WASHINGTON - The process of returning inflation to the Federal Reserve's 2-percent long-term goal "could take longer than previously anticipated," according to the latest minutes released on Wednesday.

Participants noted that although inflation had eased substantially from its peak in 2022, "it remained somewhat elevated," said the minutes of the Federal Open Market Committee (FOMC)'s Dec 17-18 meeting.

Participants commented that the overall pace of disinflation had slowed over 2024 and that some "recent monthly price readings had been higher than anticipated," it noted.

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Nevertheless, most remarked that disinflationary progress continued to be apparent across a broad range of core goods and services prices.

With regard to the outlook for inflation, participants expected that inflation would continue to move toward 2 percent, "although they noted that recent higher-than-expected readings on inflation, and the effects of potential changes in trade and immigration policy, suggested that the process could take longer than previously anticipated," the minutes showed.

At its Dec 17-18 meeting, the FOMC reduced the target range for the federal funds rate by 25 basis points to 4.25 percent to 4.5 percent -- marking the third consecutive rate cut in this easing cycle. The Fed also indicated there would be fewer cuts in the new year, as it braces for uncertainty stemming from the incoming Donald Trump administration's policies.

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"In discussing the outlook for monetary policy, participants indicated that the Committee was at or near the point at which it would be appropriate to slow the pace of policy easing," the minutes said.

The minutes noted that almost all participants judged that "upside risks to the inflation outlook had increased." Participants cited recent stronger-than-expected readings on inflation and the likely effects of potential changes in trade and immigration policy as reasons.

Other reasons mentioned included possible disruptions in global supply chains due to geopolitical developments, a larger-than-anticipated easing in financial conditions, stronger-than-expected household spending, and more persistent shelter price increases.

In discussing labor market developments, participants viewed recent readings on a range of indicators as consistent with "an ongoing gradual easing in labor market conditions" even as the unemployment rate remained low.

Earlier in the day, the Automatic Data Processing (ADP) reported in the latest National Employment Report that the US private sector added 122,000 jobs in December, fewer than the 146,000 in November and 184,000 in October.

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The report also showed that year-over-year pay growth for job-stayers slowed to 4.6 percent, the slowest pace of gains since July 2021.

According to the Fed minutes, some participants noted that the labor market "could soften further," as the recent pace of payroll growth had been below the rate that would likely keep the unemployment rate constant, given a stable labor force participation rate.

The minutes also noted that several participants cautioned that low- and moderate-income households continued to experience financial strains, which could damp their spending. A couple of participants cited continued increases in rates of delinquencies on credit card borrowing and automobile loans as signs of such strains.