Federal Open Market Committee (FOMC) hikes interest rates by 25 basis points for first time since 2006 in last policy meeting in December, but minutes from that meeting shows policy makers remain greatly concerned on inflation front.

Most policy makers according to the meeting expect, spare capacity in the economy to shrink further in 2016, leading to higher inflation eventually. But some policymakers saw the decision to lift rates as a very close call and has argued for cautious approach. Minutes not at all suggest that policymakers are in a hurry to follow up on December hike with further action and most call for close watch over inflation as well as expectations. Most are suggesting gradual; approach to rate hike, which is in contrast to FED's own dotplot, which is predicting four rate hikes in 2016.

Market is expecting with more than 50% probability that next hike to be in March.

Members have argues for more cautious approach while increasing rates as it would give FED some room, if negative economic shock hit US economy, especially stemming from abroad.

Other highlights include, policymakers' expectations of effect of Dollar and lower oil price only to be temporary. However, FED policymakers lower oil price pose significant risks that inflation could be weaker than previously thought. Although members are worried over downside risks to inflation but majority see as of now the risks to be balanced.

Last night FED's vice Chair Stanley Fischer indicated that market might be understanding FED's hike path and indicated FED to be data dependent.

That makes inflation as top watch of 2016.