Federal Reserve policymakers saw a potential threat to US growth from the global slowdown and a possible decrease in inflation in their last meeting, according to the minutes published Wednesday.
But they also said the sharp fall in oil prices would likely bring relief to American households and boost overall consumption, supporting the economy.
The solid gains in the labor market underpinned a general sense of confidence at the October 28-29 meeting of the Federal Open Market Committee, which took the momentous step of drawing a close to its crisis-era qualitative easing stimulus program.
The minutes made clear there was little thought of departing from the current policy trajectory, including keeping the benchmark fed funds interest rate at the current zero level well into 2015.
Most analysts forecast initial hikes in around the middle of next year.
But the policy makers appeared sensitive to possible deflationary trends that could be driven by slowdowns in other economies.
"Participants pointed to a somewhat weaker economic outlook and increased downside risks in Europe, China, and Japan, as well as to the strengthening of the dollar," the minutes said.
"It was observed that if foreign economic or financial conditions deteriorated further, US economic growth over the medium term might be slower than currently expected."
The FOMC staff, meanwhile, saw more downside risk to growth due to trends outside the country, and judged that "neither monetary policy nor fiscal policy appeared well positioned to help the economy withstand adverse shocks."
However, the minutes noted that "many participants" saw the effects of slower growth abroad on the US economy "as likely to be quite limited."
For one, they noted that foreign trade's impact on overall US economic growth is "relatively small" and that the stronger dollar has only a modest impact on US exports.
In addition, the fall in commodity prices including energy would be good for growth, and leave the domestic recovery "on a firm footing."
Many of those at the meeting "judged that the recent significant decline in energy prices would provide a boost to consumer spending over the near term, with several of them noting that the drop in gasoline prices would benefit lower-income households in particular," the minutes said.
The record of the meeting confirmed the turn in the view of the FOMC, led by Fed chair Janet Yellen, that the jobs market is tightening.
Since taking the helm of the Fed in February, Yellen has highlighted the chronic slack in the jobs sector even as the unemployment rate has fallen to 5.8 percent.
"Fed officials are reasonably confident that labor market improvement will continue but remain unsure about the inflation outlook," said Jim O'Sullivan, chief US economist at High Frequency Economics.
"They remained wary about sending a tightening signal too soon."
Markets were unmoved by the minutes of the October meeting. Before and after their release the S&P 500 was off about 0.3 percent, after having set a new record on Tuesday.
The dollar was slightly lower against the euro, at $1.2547 per euro, and held its early gains against the yen, at 117.92 yen.
Source: AFP