WASHINGTON (Reuters) -A divided Federal Reserve cut interest rates last month even as many policymakers cautioned that lowering borrowing costs further could risk undermining the fight to quell inflation that has been above the U.S. central bank's 2% target for four and a half years, the minutes from the October 28-29 meeting showed on Wednesday.

"Many participants were in favor of lowering the target range for the federal funds rate," the minutes stated, while noting some members of that group also would have been satisfied if the policy-setting Federal Open Market Committee had left rates steady.

Several others opposed the rate cut outright, and "expressed concern that progress toward the Committee's 2% inflation objective had stalled ... while also noting that longer-term inflation expectations could rise should inflation not return to 2% in a timely manner."

In addition, "most participants noted that ... further policy rate reductions could add to the risk of higher inflation becoming entrenched or could be misinterpreted as implying a lack of policymaker commitment to the 2% inflation objective," the minutes added.

U.S. stocks pared gains slightly after the release of the minutes. Traders now see only about a one-in-four chance the Fed will cut rates in December, based on short-term interest-rate futures pricing.

Shortly before the release of the minutes, President Donald Trump repeated his criticism of Fed Chair Jerome Powell's stewardship of the central bank, saying he'd "love to fire his ass" for not cutting rates faster.

IMPACT OF GOVERNMENT SHUTDOWN

The Fed's rate-setting committee voted 10-2 at last month's meeting to cut the benchmark interest rate by a quarter of a percentage point to the 3.75%-4.00% range, with the two dissents unusually split in favor of both tighter and looser monetary policy.

The minutes suggested a spirited search for compromise as officials grappled with the lack of data due to the recent U.S. government shutdown, weighed risks of rising inflation against the risks of a weakening job market, and even cautioned against the possibility of a "disorderly fall in equity prices" if there was an "abrupt reassessment" of investments in artificial intelligence.

Powell said in unusually blunt terms in his press conference on October 29 that a rate cut at the Fed's December 9-10 meeting was not a "foregone conclusion."

"There's a growing chorus now of feeling like maybe this is where we should at least wait a cycle" before considering another rate cut, Powell told reporters.

The "chorus" was described in the minutes, with policymakers cut into three different groups in their discussion of the December meeting.

"Several" participants saw a December reduction as likely appropriate, several others saw lower rates as eventually appropriate though not necessarily as of December, while "many participants" had already ruled out a December cut.

With official data releases suspended ahead of the October meeting due to the shutdown, officials were left to evaluate alternative information, which may have added to an emerging sense of caution about further monetary easing.

"Many participants agreed that the Committee should be deliberate in its policy decisions against the backdrop of ... two-sided risks and reduced availability of key economic data," the minutes said.

Since the October meeting, investors have pared bets on a December rate cut from what had been greater than 90% odds. The public comments of Fed policymakers reflect ongoing division in the absence of official data on jobs and inflation.