NEW YORK, May 22 (Reuters) - The dollar rose against the euro on Wednesday after minutes of the last Fed meeting showed officials acknowledging disappointment over recent inflation readings, while the pound held its gains after British Prime Minister Rishi Sunak called for a general election for July 4.

Federal Reserve officials at their last policy meeting indicated they still had faith price pressures would ease, if only slowly, according to the


of the U.S. central bank's April 30-May 1 session.

"Participants ... noted that they continued to expect that inflation would return to 2% over the medium term," the minutes said, but "the disinflation would likely take longer than previously thought."

While the policy response for now would "involve maintaining" the central bank's benchmark policy rate at its current level, the minutes, released on Wednesday, also reflected discussion of possible further hikes.

Investors have been shoring up U.S. rate cut bets after a milder inflation reading last week, even as Fed officials have continued to sound a cautious note.

Fed Governor Christopher Waller on Tuesday said he would need to see several more months of good inflation data before he would be comfortable supporting rate cuts.

That timeline was echoed by Cleveland Fed President Loretta Mester.

"The minutes confirmed what most traders were already thinking prior to the U.S. CPI report a week ago," said Amarjit Sahota, director at foreign exchange risk management firm Klarity FX in San Francisco.

"That is, FOMC members were becoming increasingly frustrated with the disappointing inflation reading in the first quarter, but felt that policy was restrictive enough," Sahota said.

"The inclusion that some officials were willing to tighten policy further has given the USD a further uplift since the minutes were released," he said.

While markets remain hopeful that U.S. inflation will continue to cool, personal consumption expenditures data due on May 31 will be a crucial test, analysts said.

The euro was down 0.3% at $1.08205.

Meanwhile, the pound was 0.1% higher at $1.2717 after Prime Minister Sunak called a national election on Wednesday, naming July 4 as the date for a vote his governing Conservatives are widely expected to lose to the opposition Labour Party after 14 years in power.

The pound rose earlier in the session after data that showed

UK inflation did not slow as much as expected but neared the BoE's target in April, prompting investors to pull bets on a rate cut next month.

British consumer prices rose by 2.3% in annual terms in April, slowing from a 3.2% increase in March. The BoE and economists polled by Reuters had forecast an annual rate of 2.1%.

Money markets now see only a 15% chance of a rate cut in June, according to LSEG data. Earlier this week, pricing in derivatives markets suggested traders saw a 55% chance of a first cut coming in June.

Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets in London, said the inflation data-induced rate repricing looked overdone.

"We would be mindful of GBP rallies proving to be short-lived, as the immediate move in rate cut expectations appears overdone, not least should tomorrow’s flash service PMI reading reveal signs of consumer fatigue," he said.

Elsewhere, the Reserve Bank of New Zealand left its benchmark cash rate at 5.5% as expected, but lifted its forecasts for peak interest rates at its latest monetary policy meeting as inflation stays stubbornly high.

It now sees rates peaking at 5.7% at the end of 2024, compared with 5.6% three months ago.

The New Zealand dollar jumped as high as $0.6152, its highest since March 14, before giving up the gains to trade little changed on the day at $0.6086.

Against the yen, the dollar rose 0.3% to 156.62 after data showed Japan's


rose 8.3% in April from a year earlier.

Fears of currency intervention by Tokyo still had traders on alert after suspected rounds of intervention earlier this month.



, ether eased 0.3% to $3,735 after jumping 22% over the previous two sessions on speculation about the outcome of applications for U.S. spot exchange-traded funds that would track the world's second-biggest cryptocurrency. Bitcoin was about flat on the day at $69,605 on Wednesday.

(Reporting by Joice Alves in London and Brigid Riley in Tokyo; Editing by Christina Fincher, Bernadette Baum and Diane Craft)