Fed Minutes Show A 'Few' Participants Favored 0.5% Hike, Inflation Still Remains 'Unacceptably High'

The SPDR S&P 500 SPY is volatile Wednesday afternoon after minutes from the Federal Reserve's last meeting showed that officials agreed to keep hiking rates in order to fight sticky inflation.

Moreover, the committee also agreed that it will likely need to maintain higher rates until inflation shows clear signs of a slowdown.

What To Know: The Fed raised its target fed funds rate by 0.25% at the beginning of the month, marking the central bank's second consecutive policy downshift.

Minutes from last month's meeting show that most officials opted for the 0.25% hike, but a "few" officials were in favor of a 0.5% increase.

"Participants agreed that the risks to the outlook for economic activity were weighted to the downside," the January Fed minutes said.

"A few participants stated that they favored raising the target range for the federal funds rate 50 basis points at this meeting or that they could have supported raising the target by that amount. The participants favoring a 50-basis point increase noted that a larger increase would more quickly bring the target range close to the levels they believed would achieve a sufficiently restrictive stance, taking into account their views of the risks to achieving price stability in a timely way."

The bond market is projecting another 0.25% hike in March, although some expect the Fed to opt for a more aggressive 0.5% increase.

The FOMC meeting was held at the beginning of the month, ahead of the latest CPI print, which most experts agree shows that inflation is not falling fast enough for the Fed.

Related Link: 3 Experts Agree: Inflation Is Not Coming Down Fast Enough For The Federal Reserve

The Labor Department reported a 6.4% increase in January, down from 6.5% in December. The number came in above economist estimates of 6.2%.

"With inflation still well above the Committee's longer-run goal of 2 percent, participants agreed that inflation was unacceptably high. A number of participants commented that the costs of elevated inflation are particularly high for lower-income households. Participants noted that inflation data received over the past three months showed a welcome reduction in the monthly pace of price increases but stressed that substantially more evidence of progress across a broader range of prices would be required to be confident that inflation was on a sustained downward path," the minutes said. 

It's likely the Fed has turned even more hawkish than the latest meeting minutes show given the hotter-than-expeceted CPI print last week. The Fed's next decision on rates is due on March 22.

SPY Price Action: The SPY was up 0.25% at $400.10 Wednesday afternoon, according to Benzinga Pro.

Fed Chair Jerome Powell. Photo courtesy of the Federal Reserve.