Policymakers at the Federal Reserve continue to see "considerable uncertainty" about the effects of possible fiscal stimulus from the Trump administration, according to meeting minutes released Wednesday.
The minutes also showed some disagreement among central bankers over the near-term dangers of inflation, a subject that had divided Fed members in mid-2016.
The minutes recorded the views of policymakers expressed at a March 14 - 15 meeting, when they voted to raise their benchmark interest rates to head off mounting inflation.
They also said they expected a gradual shift away from their post-financial crisis policy of reinvesting in Treasury bills and mortgage-backed securities "later this year" if economic conditions allow.
The most recent projections from the Federal Open Market Committee, which sets the Fed's benchmark rates, were for a total of three rate hikes in 2017.
"Participants continued to underscore the considerable uncertainty about the timing and nature of potential changes to fiscal policy," the minutes said.
- Waiting till 2018 -
President Donald Trump arrived in the White House with an agenda pledging corporate tax cuts, infrastructure spending and slashed regulation, but such policies have yet to take shape.
Parts of his agenda, such as health care -- which has considerable consequences for taxation -- face long odds among fractious lawmakers in the majority Republican Party.
"Several participants now anticipated that meaningful fiscal stimulus would likely not begin until 2018," the minutes said, "and about half of the participants did not incorporate explicit assumptions about fiscal policy in their projections."
While FOMC members expected gradual economic growth, the minutes also show some disagreement over the near-term dangers of inflation.
The Fed's preferred inflation measure, the Personal Consumption Expenditures price index, has moved steadily towards the Fed's two percent target, adding to pressure on the central bank to raise rates.
But policymakers last month were divided as to how soon the world's largest economy is likely to hit two percent "on a sustained basis," according to the minutes.
Some at the March meeting pointed out that "core" inflation, excluding volatile food and fuel, appeared tame and could take time before settling at or above the target level.
"These participants emphasized that a sustained return to two percent inflation was particularly important in light of the persistent shortfall... over the past several years," the minutes said.
Others felt the Fed had largely met its inflation objective and that "a faster pace of scaling back accommodation" could be warranted.
Ian Shepherdson of Pantheon Macroeconomics said the minutes showed policymakers still could not agree on how much slack remained in labor markets.
"Fed officials remain split on the question of how much inflation pressure is now in the system... but it has become hard for doves to argue that the economy is still some way from full employment," he wrote.
"No firm decisions have yet been made but it seems pretty clear now that reinvestment will be slowed."
Some Fed members also pointed to looming elections in Europe -- where a wave of populism has called prevailing trade policy into doubt -- as posing near and longer-term economic dangers.
Economic conditions in China and Europe, which had caused the Fed to forego rate increases in early 2016, appeared to have stabilized, according to the minutes.
"At the same time, several participants cautioned that upcoming elections in EU countries posed both near-term and longer-term risks," the minutes said.
- Wall Street heads lower -
France is due to stage the first round of its presidential elections later this month, with the far-right Front National candidate Marine Le Pen (Other OTC: PENC - news) poised to make a strong showing.
Long hostile to the European Union and free trade, she has vowed if elected to hold a referendum within six months on renegotiating the terms of France's EU membership.
The release of the minutes came a day after the sudden resignation of FOMC member Jeffrey Lacker -- the president of the Richmond Federal Reserve Bank -- who admitted to a role in the leak of confidential minutes meetings in 2012.
The development may raise the temperature for the Fed, observers said, with hostile lawmakers in Washington threatening to audit the central bank or take measures some critics say could curtail its independence.
With (Other OTC: WWTH - news) the private payrolls firm ADP reporting Wednesday that the economy added another 263,000 net new positions, Fed watchers are looking for another strong official jobs report on Friday to add pressure on the Fed to raise rates as soon as June.
Before the release of the minutes, Fed funds futures put the odds of a rate hike in June at more than 63.4 percent.
Wall Street headed lower following the minutes' release, with the major indices paring gains made earlier in the day.
Shortly after 1900 GMT, the blue-chip Dow Jones Industrial Average was up 0.3 percent at 20,745.94, the broader S&P 500 added 0.2 percent at 2,364.20 and the Nasdaq (Frankfurt: 813516 - news) was essentially flat at 5,896.06.