03:41 PM EDT, 04/09/2025 (MT Newswires) -- Federal Reserve officials indicated last month that tariffs were likely to increase inflation this year, while heightened macro uncertainty called for a "cautious approach," minutes from the central bank's March 18-19 meeting showed Wednesday.

At the meeting, the Federal Open Market Committee kept interest rates steady in the range of 4.25% to 4.50% for a second straight time. Policymakers kept their policy outlook intact through 2027, while downgrading their economic projections. They raised their inflation views for 2025 and 2026 at the time.

"Participants judged that inflation was likely to be boosted this year by the effects of higher tariffs, although significant uncertainty surrounded the magnitude and persistence of such effects," the meeting minutes showed Wednesday. "Participants remarked that uncertainty about the net effect of an array of government policies on the economic outlook was high, making it appropriate to take a cautious approach."

The meeting took place before the White House's announcement of a sweeping new tariff policy last week, in addition to levies already implemented or planned for certain trading partners.

In a Wednesday social media post, President Donald Trump announced a 90-day pause on the full effect of his new tariffs for countries that have not retaliated against the US. A lower tariff rate of 10% would be applicable during the period, he said, adding that his administration was increasing duties on China to 125%, effective immediately.

Earlier Wednesday, China increased tariffs on imports from the US to 84% from 34%, effective Thursday, after Trump boosted duties on the Asian country to above 100% in total.

"Several participants noted that the announced or planned tariff increases were larger and broader than many of their business contacts had expected," according to the meeting minutes. "Several participants also noted that their contacts were already reporting increases in costs, possibly in anticipation of rising tariffs, or that their contacts had indicated willingness to pass on to consumers higher input costs that would arise from potential tariff increases."

On Friday, Fed Chair Jerome Powell said that the Trump administration's tariffs will likely drive inflation higher and slow down US economic growth.

There were some signs that consumer spending might be moderating from its "rapid pace" over the previous two quarters, the FOMC minutes showed Wednesday. Several policymakers indicated that recently downgraded earnings outlooks by retailers and airlines suggested weaker demand conditions.

The odds that the FOMC will again leave interest rates unchanged next month jumped to 81% Wednesday from 56% Tuesday, according to the CME FedWatch tool. The odds of a 25-basis-point rate cut fell to 19% from 44%.

The committee is "well positioned" to wait for greater clarity on how inflation and economic activity evolve, the FOMC meeting minutes showed.