Concerns about interest rate reductions remain.

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Japan's Nikkei reached a new record high on Thursday, while other regional markets also advanced. The Nikkei 225 spiked 2% to close at 39,098.68, surpassing the previous record high of 38,915.87 set in 1989. Meanwhile, Wall Street ended mixed as investors digested the U.S. Federal Reserve's minutes from the January meeting. The S&P 500 gained 0.13%, while the Dow Jones Industrial Average rose 0.13%. However, the Nasdaq Composite slid for a third session in a row.

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The Federal Reserve's last meeting revealed that central bank officials were cautious about rapidly lowering interest rates. Additionally, members highlighted the significance of meticulously evaluating incoming data in determining whether inflation is steadily declining to a sustainable 2%.

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The bottom line

The January minutes showed that Fed officials were cautious about reducing rates prematurely.

Although many members thought rates had reached their peak, there was still uncertainty about the inflation outlook.

Officials were concerned that if consumer spending remained strong, progress might stall and inflation risks would increase, so the Fed remained "highly attentive" to these risks.

The minutes noted that there is a possibility that aggregate demand momentum may be stronger than currently assessed, due to resilient consumer spending last year, which could have both positive and negative impacts on inflation and economic activity.

The possibility of rate cuts starting in March has decreased, and most traders now anticipate the first cut occurring in the middle of the year.

The meeting took place prior to the release of the January jobs report and the unexpectedly high consumer and producer price data.

Ian Shepherdson, the chief economist at Pantheon Macroeconomics, wrote that policymakers will feel more vindicated and less eager to ease after seeing those numbers.

The essence of turning points is that they can bring about rapid changes, and we anticipate that the labor market and inflation data by the May meeting will indicate that the Fed must loosen its monetary policy.

If the central bank maintains an overly restrictive stance for too long, it could lead to a bumpier landing and further worry investors about the economy.