Fed sees weakness as 'transitory,' all but rules out June hike: Minutes

Federal Reserve officials at their April meeting mostly brushed aside the wobbly start the U.S. economy has had in 2015, attributing the lack of growth to "transitory" factors that will abate soon.

Meeting minutes show a Fed Open Market Committee with little concern about growth, even though they detailed a laundry list of weak spots that included industrial production, housing and investment. Gross domestic product grew just 0.2 percent in the first quarter—a number likely to be revised to a negative—while the Atlanta Fed is tracking second-quarter growth at just 0.7 percent.

Despite their mostly dismissive tone, FOMC officials nevertheless decided against increasing the committee's benchmark interest rate, a nonmove telegraphed at the March meeting. They even removed language providing any indication of when a liftoff might occur.

As for the key issue of interest rate timing, the minutes indicated "a few" members thought economic and financial conditions would be sufficient for a June liftoff.

Read MoreThe unemployed are dropping out like flies

However, that sentiment didn't carry the day. (Tweet This)

"Many participants, however, thought it unlikely that the data available in June would provide sufficient confirmation that the conditions for raising the target range for the federal funds rate had been satisfied, although they generally did not rule out this possibility," the minutes said.

Janet Yellen
Andrew Harrer | Bloomberg | Getty Images
Janet Yellen

Market reaction was generally positive after the release, with stock prices higher and Treasury yields negative.

"This reminds us of the much more dismal tone the Fed has taken regarding the overall economy of late," said Lindsey Piegza, Sterne Agee chief economist. "I think this is going to redirect the focus back to the weakness of the fundamentals in the U.S. which has been ignored as of late and I think this weakness further justifies the Fed to remain on hold at the earliest the latter part of 2015."

Much of the discussion centered on how the Fed would let markets know it was ready to raise rates.

Some members wanted "an explicit indication, in post-meeting statements" prior to the first hike.

"However, most participants felt that the timing of the first increase in the target range for the federal funds rate would appropriately be determined on a meeting-by-meeting basis and would depend on the evolution of economic conditions and the outlook," the minutes said.

Read MoreHere's where the bubbles are—and aren't: Citi

The latter statement is consistent with comments from Fed Chair Janet Yellen and other central bank officials that rate hikes would be "data dependent."

"From the Fed's point of view it's not just about that GDP number, we have to see underlying improvement in a plethora of sectors in the economy in order to justify a change in policy," Piegza said.

The cautious tone was reflected further in discussions over how the committee would proceed after the first rate increase. Members said the Fed should keep close tabs on economic and financial conditions, and prepare to adjust policy accordingly.

The statements indicated the Fed likely won't be following a set path once it does start tightening monetary policy.

"As part of prudent contingency planning, participants agreed to have the staff provide more frequent updates on financial market developments for a period after firming begins," the minutes said. "Such updates would ensure that, if adjustments to policy normalization tools prove necessary to maintain appropriate control over money market rates, policymakers could make such changes in a timely manner."

—CNBC.com's Reem Nasr contributed to this report.