WASHINGTON (Reuters) - Federal Reserve policy-makers earlier this month saw a weakening economic outlook and financial market stress as supporting the case for steady interest rates despite persistent concerns about inflation pressures.At their August 5 meeting, members of the rate-setting Federal Open Market Committee agreed at that softening labor markets, high energy prices and a continuing housing contraction would weigh on future growth, leaving U.S. economic activity "damped" for several quarters.
"In addition, members saw continuing downside risks to this outlook, particularly reflecting possible further deterioration in financial conditions," the Fed said in the minutes, released on Wednesday.
While the members agreed the next policy move would likely be an increase in rates, most of them did not see the Fed's current monetary stance as "particularly accommodative," because households and businesses were facing tighter credit and higher borrowing costs.
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