The Federal Reserve worried about foreign risks to the US economy but could raise interest rates despite weaker-than-desired inflation, according to the minutes of the last meeting published on Wednesday.
"Many participants regarded the international situation as an important source of downside risks to domestic real activity and employment," the minutes of the December 16/17 meeting of the Federal Open Market Committee (FOMC) said.
The potential for weaker US economic growth would rise "particularly if declines in oil prices and the persistence of weak economic growth abroad had a substantial negative effect on global financial markets," the minutes said, "or if foreign policy responses were insufficient."
The outlook for growth in the eurozone, Japan and China has dimmed and slumping oil prices are battering the economies of Russia, Venezuela and other oil-exporting countries.
The final 2014 meeting of the Fed's policy arm came amid a plunge in oil prices since June that has further deepened, more than halving the value of crude oil to below $US50 a barrel currently.
But the FOMC, in its December discussion of when to start raising the federal funds rate, pegged near zero for six years to support the recovery from deep recession, saw a boon from lower oil prices.
Several participants expected slower economic growth abroad to curb the US economy, mainly through lower net exports.
"But the net effect of lower oil prices on US economic activity was anticipated to be positive."
The policymakers saw "broad-based improvement" in the labour market since their October meeting, with solid gains in job growth, a small reduction in the unemployment rate and increased hiring.
But despite the labour gains and the economy growing at a "moderate" pace, "most participants saw no clear evidence of a broad-based acceleration in wages."
The policymakers indicated that the Fed may raise rates even though inflation remained below target.
"With lower energy prices and the stronger dollar likely to keep inflation below target for some time, it was noted that the Committee might begin normalisation at a time when core inflation was near current levels, although in that circumstance participants would want to be reasonably confident that inflation will move back toward two per cent over time," the minutes said.
Most participants agreed to adding language in the FOMC statement about being patient in deciding to raise interest rates, saying it indicated the process was unlikely to begin "for at least the next couple of meetings."
That suggested the first rate hike could come earlier than expected, perhaps as soon as April, after the January and March meetings, said Omer Esiner of Commonwealth Foreign Exchange.
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