• US stocks closed lower on Wednesday after Fed minutes showed officials remain worried about inflation.

• Policymakers at the July meeting agreed that inflation still poses risk of a resurgence.

• Markets have been confident in their belief that the July rate hike was the last of the Fed's cycle.

US stocks ended lower on Wednesday after minutes from the last Federal Reserve meeting indicated that central bankers think inflation is still high enough to potentially warrant more interest rate hikes.

The minutes of the July Federal Open Market Committee meeting come as markets have been feeling confident that July's 25-basis-point rate increase marked the final hike of the Fed's aggressive monetary policy tightening cycle.

"With inflation still well above the Committee's longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy," the meeting minutes read.

"In discussing the policy outlook, participants continued to judge that it was critical that the stance of monetary policy be sufficiently restrictive to return inflation to the Committee's 2% objective over time."

Some market observers said that the Fed's tone indicates its most aggressive moves are likely done, and even another quarter-point hike shouldn't deter investor confidence that the end of the rate hike cycle is in sight.

"The Fed wants to talk tough on inflation, but it's obvious they are done with rate hikes. These minutes don't signal a pivot back to large rate hikes," Jamie Cox, managing partner at Harris Financial Group, said.

Still, others warned that investors should brace for even more hawkish Fed moves.

"Recent third quarter GDP estimates, coupled with fresh retail sales data, suggest a much more robust underpinning to the economy, certainly not what the Fed wants to see as they navigate the so-called 'last mile' towards achieving price stability," Quincy Krosby, chief global strategist at LPL Financial, said. "The July 26 rate hike was most likely not a one and done as the latest round of data suggests."

Odds of another rate hike at the September meeting ticked slightly higher after the July minutes, showing traders think there's an 88% chance the Fed holds steady compared to odds of over 95% before the minutes were released.

The Fed will have another inflation report and another jobs report to sift through before it makes another policy decision.