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Federal Reserve policymakers expressed a cautious outlook on wage growth amid a "few signs of a broad-based pickup in wage growth," but remained confident that inflation would "move up this year," according to the minutes of the Fed's January policy meeting. "Inflation on a 12-month basis was expected to move up this year and to stabilize around the Committee’s 2 percent objective over the medium term," the minutes showed. "While some participants heard more reports of wage pressures from their business contacts over the intermeeting period, participants generally noted few signs of a broad-based pickup in wage growth in available data,” the minutes showed.

The minutes also showed that the central bank remained cautious on the pace of wage gains amid low productivity growth. That said, however, central bank officials expressed confidence that ongoing tightening in labor markets was “likely to translate into faster wage increases at some point.” Federal Reserve policymakers did, however, signal that further rate hikes were appropriate in the wake of a stronger outlook on economic growth. "A majority of participants noted that a stronger outlook for economic growth raised the likelihood that further gradual policy firming would be appropriate," the minutes stated. The Federal Reserve's somewhat subdued outlook on wage growth differed from market participants' current expectations that wage growth was beginning to gain sustainable momentum following January's bullish jobs report. Markets appeared to judge the minutes as dovish as the dollar turned negative, while gold added to gains.