Importantly, tariff increases that were announced before May 6 were "significantly larger and broader" than Fed members expected. As a result, downside risks to employment and economic activity increased, while upside risks to inflation had risen.

Fed members noted that short-term inflation expectations have increased, which could put additional upward pressure on inflation. It should be noted that the Minutes did not show that Fed was extremely worried about the significant increase in short-term inflation expectations.

At this point, the central bank believes that longer-term inflation expectations remain anchored, which is more important than dynamics of short-term expectations.

Fed believes that it is appropriate to wait before changing the federal funds rate, as the tariff policy and its effect on the economy is highly uncertain.

Overall, the Minutes did not contain major surprises. The central bank needs more time to assess the impact of Trump's tariff policy, so it will not hurry to change rates.

U.S. Dollar Index remained stuck near the 99.90 level as traders reacted to FOMC Minutes.