When the Federal Reserve decided to keep rates the same at the conclusion of its January meeting, the policy-making Federal Open Market Committee (FOMC) shifted its tone dramatically in its statement. It was telling the market that it would be patient when considering future rate hikes, a welcome change from its previous statements that had been calling for further rate hikes in 2019.

We just got a glimpse Wednesday afternoon of the minutes from that meeting, and we've gotten some insight on the story behind the shift in policy.

Interest rates on pieces of paper.

Image source: Getty Images.

Economic conditions don't look quite so upbeat

From the minutes, we've learned that the FOMC took into account data on soft inflation, the (then-ongoing) government shutdown, and the potential impact of the U.S.-China trade negotiations on the economy when the committee decided to pump the brakes on its path of rate hikes.

Another change apparent in the minutes is a lack of inflation concerns among FOMC members. Previously, the committee's members had expressed concerns that keeping rates low could cause inflation to spike. In January, however, members said that keeping rates where they are (a target range of 2.25%-2.50% for the federal funds rate) didn't pose a major inflation risk for the time being. That was a big change in tone.

Some clarity on the Fed's balance sheet reduction

One big area of concern has been the Fed's balance sheet reduction, which there hasn't been too much clarity on recently. The Fed currently holds $3.8 trillion in bonds on its balance sheet and has been slowly reducing its holdings since late 2017.

Addressing this reduction, the FOMC said that asset sales had been going smoothly and haven't appeared to influence markets at all, and that the federal funds rate remains the primary tool for adjusting monetary policy. However, the minutes did provide some clues on what investors can expect going forward:

"Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve's asset holdings later this year. Such an announcement would provide more certainty about the process for completing the normalization of the size of the Federal Reserve's balance sheet."

In other words, the Fed's balance sheet runoff will more than likely stop before the end of 2019.

U.S. markets had little reaction but were generally up following the report's release.