Fed divided over longer-term path

While almost all members of the Federal Reserve voted to raise interest rates in June, the central bank remains divided over its longer-term plans as data continue to show that the economy is not vigorously responding to its rate increases. That's revealed in minutes from the Fed's closed-door June meeting.

Even among Fed officials who supported increasing the benchmark interest rate in June, several 'indicated they were less comfortable” with the Fed's longer-term plan for raising rates, the meeting notes show.

The minutes also showed central bankers divided over precisely when to begin reducing the Fed's massive balance sheet, a task that they have indicated they will begin before the end of the year.

Some officials argued for beginning to shrink the balance sheet in the next few months, while others advocated waiting to see how the economy progresses.

The Federal Reserve chose to raise its benchmark interest rate by a quarter-point at the conclusion of the June 13-14 meeting, the third such increase in six months.

The decision was nearly unanimous, with eight members of the committee voting in favor and only one voting against it.

The interest rate increase was a vote of confidence in the economy. But economists and investors are increasingly questioning whether the economy is strong enough to warrant the Fed's relatively ambitious pace of rate hikes, as the Fed continues to forecast another rate hike this year and three more rate hikes each in 2018 and 2019.

Fed chairwoman Janet Yellen has emphasized that the bank's actions will hinge on the performance of the economy. Thus far, the Fed has not been dissuaded by lower inflation readings that suggest the economy may not be as strong as other economic indicators suggest.

The Fed's favored inflation measure, the core personal consumption expenditure index, grew just 1.4 percent at an annualized rate in May, below the rate that the Fed targets.