Federal Reserve officials at their policy meeting in July largely remained concerned that inflation would fail to recede and that further interest-rate increases would be needed. At the same time, cracks in that consensus were also becoming more apparent.

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“Most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy,” according to minutes of the US central bank’s July 25-26 policy meeting published Wednesday in Washington.

But two Fed officials favored leaving rates unchanged or “could have supported such a proposal,” instead of the rate hike the Federal Open Market Committee ultimately authorized at the conclusion of the meeting, the minutes showed.

“Minutes from the July FOMC meeting frame the emerging tension between inflation data that is moderating faster than the Fed anticipated and growth data that is coming in stronger than the Fed anticipated,” Evercore ISI economists led by Krishna Guha said in a note after the release.

The July rate hike brought the target range for the Fed’s benchmark rate to 5.25-5.5 percent, the highest level in 22 years. That marked a resumption of increases after officials left rates unchanged at the previous gathering for the first time since they began tightening in early 2022.

Investors currently do not expect another rate increase this year, according to futures contracts, though the implied odds of a hike at the October 31-November 1 meeting are higher than those for their next meeting on September 19-20. They continue to see the Fed commencing with rate cuts in 2024, with the benchmark seen falling to around 4.25 percent by the end of next year.

Fed watchers will listen for a possible signal at the Kansas City Fed’s annual Jackson Hole conference in Wyoming next week, where Powell is expected to deliver remarks.

Key economic data published since the July gathering have mostly supported the notion that Fed officials will have some time to deliberate over the need for more tightening.

The minutes also conveyed some optimism about the outlook as the Fed’s influential staff economists “no longer judged that the economy would enter a mild recession toward the end of the year.”

Still, they expected economic growth over the next two years “would run below their estimate of potential output growth, leading to a small increase in the unemployment rate relative to its current level.”