Stock-Federal-Reserve Image Credit: Shutterstock

Washington: US central bankers do not expect it will be "appropriate" to start cutting interest rates this year with inflation remaining high, according to minutes of the latest Federal Reserve policy meeting released Wednesday.

The Fed has waged an all-out campaign to cool the world's biggest economy as inflation surged to a 40-year high last year, raising the benchmark lending rate seven times.

This brought the rate to a range between 4.25 and 4.50 percent by the Fed's December meeting, the highest level since 2007.

But Fed policymakers believe "a restrictive policy stance would need to be maintained" until data brings confidence that inflation is on a sustained downward path, according to the minutes.

The aim is a rate of two percent.

"No participants anticipated that it would be appropriate to begin reducing the federal funds rate target in 2023," the minutes added.

While the Fed had slowed its pace of rate increases in December after several steep rate hikes, the report released Wednesday showed officials were concerned about any "misperception" of their moves.

A number of meeting participants emphasised the need to "clearly communicate" that a slowing in the pace of rate hikes was not a sign of a weakening in resolve when it came to the inflation fight.

Gold hovers near mid-June highs 

Gold held near seven-month highs reached on Wednesday after the minutes of the Federal Reserve's last meeting showed all its policymakers remained committed to fighting inflation, but agreed on the need to slow rate hikes in 2023.

Spot gold rose 0.7% to $1,851.41 per ounce by 2:48 p.m. ET (1948 GMT), having risen as much as 1.4% earlier to its highest price since June 13.

US gold futures settled up 0.7% at $1,859.

"Gold is holding remarkably steady despite Fed minutes that state clearly that rates will continue to rise and there would be no rate cuts in 2023 contrary to what the market has priced," said Tai Wong, a senior trader at Heraeus Precious Metals in New York.

Dollar weakens

The dollar index was down 0.2 per cent, making gold less expensive for overseas investors, while benchmark 10-year yields were slightly higher for the day.

Higher rates tend to weigh on non-yielding gold.

The minutes indicated that officials "emphasized the need to retain flexibility and optionality when moving policy to a more restrictive stance," with a scale back to quarter-percentage-point increases as of the Jan. 31-Feb. 1 meeting possible, but open to an even higher "terminal" rate if inflation persists.

Fed fund futures kept bets that the central bank would raise rates another half of a percentage point in coming months before pausing just shy of 5 per cent.

Gold prices could, however, ease if recent aggressive buying in Asia and Europe fades, Wong added, while expecting that gold could move between $1,800-$1,900 in the short term.

Silver fell 1 per cent to $23.74 per ounce, platinum was down 0.6 per cent, to $1,077.03, while palladium jumped 5.4% to $1,802.13.