Minutes from the Federal Reserve’s January meeting released on Wednesday revealed members of its committee believe Trump’s policies might “hinder the disinflation process”.

“Business contacts in a number of districts had indicated that firms would attempt to pass on to consumers higher input costs arising from potential tariffs,” the minutes said.

The release of the comments comes as the Fed faces criticism from Trump for not cutting interest rates sooner after leaving rates unchanged in the January meeting.

The Fed minutes also revealed “elevated uncertainty regarding the scope, timing, and potential economic effects of possible changes to trade, immigration, fiscal, and regulatory policies”.

“A couple of participants remarked that, in the period ahead, it might be especially difficult to distinguish between relatively persistent changes in inflation and more temporary changes that might be associated with the introduction of new government policies,” the minutes added.

The Fed minutes also showed the central bank’s readiness to hold rates steady amid stubborn inflation and economic-policy uncertainty.

The central bank left the key interest rate unchanged in a range of 4.25% to 4.5% in the January meeting, hitting pause after a string of cuts late last year.

The Fed’s chair Jerome Powell has previously said the bank was not “in a hurry” to cut more, given significant uncertainty about where the economy might be headed

Analysts predict the Fed will likely cut the benchmark interest rate only once in 2025, with a big possibility of no rate cuts at all.

Trump’s campaign promises included calls for lower interest rates, which would bring relief to borrowers.

It has sparked debate about whether he will respect the tradition of Fed independence, which is meant to keep it focused on the long term health of the US economy and away from politics.

Mr Powell previously told reporters that he had had “no contact” with Trump and the bank was focused on the data in setting rates.

But questions Powell faced about how the Fed is handling a new order from the White House to cancel diversity programmes – and why it had withdrawn from a global group of central banks focused on the risks of climate change to the financial system – underscored the challenges he will face keeping the bank above the political fray.

In a widely expected move, the Federal Reserve set its key lending rate in a target range of 4.25% to 4.5%.

That is down a full percentage point since September, when the bank started lowering borrowing costs, citing progress stabilising prices and a desire to head off economic weakening.

Reports since then indicate that the number of jobs being created has been more resilient than expected, while price rises have continued to bubble.

Stocks in the US fell sharply as Federal Reserve chairman Jerome Powell warned the situation would likely result in fewer rate cuts than expected next year.

“We are in a new phase of the process,” he said at a press conference.

“From this point forward, it’s appropriate to move cautiously and look for progress on inflation.”

The Dow Jones Industrial Average closed 2.58% lower, suffering its 10th session of declines in a row and marking its longest streak of daily losses since 1974.

The S&P 500 lost almost 3% and the Nasdaq Composite fell 3.6%.

In morning trade in Asia on Thursday, Japan’s Nikkei 225 was around 1.2% lower, while the Hang Seng in Hong Kong was down by 1.1%.

Inflation, which measures the pace of price increases, has proven stubborn in recent months, ticking up to 2.7% in the US in November.

Analysts have also warned that policies backed by president-elect Donald Trump, including plans for tax cuts and widespread import tariffs, could put upward pressure on prices.

Analysts say lowering borrowing costs risks adding to that pressure by making it easier to borrow and encouraging businesses and households to take on credit to spend.

If demand rises, higher prices typically follow.

Mr Powell defended the cut on Wednesday, pointing to cooling in the job market over the last two years.

But he conceded that the move was a “closer call” on this occasion and acknowledged there is some uncertainty as the White House changes hands.

Olu Sonola, head of US economic research at Fitch Ratings, said it felt like the Fed was signalling a “pause” to cuts as questions about White House policies make it more unsure about the path ahead.

“Growth is still good, the labour market is still healthy, but inflationary storms are gathering,” he said.

Wednesday’s rate cut – formally opposed by one Fed policymaker – is the last by the central bank before president-elect Donald Trump takes office.

He won the election in November promising to bring down both prices and interest rates.

But mortgage rates have actually climbed since September, reflecting bets that borrowing costs will stay relatively high.

Forecasts released by the Fed on Wednesday showed policymakers now expect the bank’s key lending rate to fall to just 3.9% by the end of 2025, above the 3.4% predicted just three months ago.

They also anticipate inflation staying higher next year than previously forecast, at about 2.5% – still above the bank’s 2% target.

John Ryding, chief economic advisor at Brean Capital, said he thought it would have been wiser for the Fed to hold off on a cut at this meeting, despite the likelihood it would upset markets.

“There has been enormous progress made from the peak in inflation to where the US is now and it risks giving up on that progress, possibly even that progress being partially reversed,” he said. “The economy looks strong… What’s the rush?”

The Fed announcement comes a day before the Bank of England is due to make its latest interest rates decision in the UK, where price inflation has also recently ticked higher.

It is widely expected to hold its benchmark rate steady at 4.75%.

Monica George Michail, associate economist at the National Institute of Economic and Social Research, said the Bank of England was facing rates of wage growth and price increases for services that are hotter than in the US.

Some of the government’s plans, which include hikes to the minimum wage, will also put pressure on inflation, she added.

“The Bank of England is trying to remain cautious,” she said.

But she warned that inflation risks are present in the US as well, pointing to Mr Trump’s tariff plans.

Mr Ryding said he thought the Bank of England – which unlike the Fed, does not have to consider unemployment as part of its mandate – was more clearly responding to the reality of the situation in front of it.

“The Bank [of England] is being more of a prudent central bank than the Fed is right now,” he said.