(Bloomberg), Federal Reserve officials indicated that an improving economy and higher inflation could cause earlier and more rapid interest-rate rises than expected. Some policy makers favor starting to shrink the bank balance soon afterwards.

“Participants generally noted that, given their individual outlooks for the economy, the labor market, and inflation, it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated,” according to minutes of the Dec. 14-15 meeting of the U.S. central bank’s policy-setting Federal Open Market Committee, published Wednesday.

“Some participants also noted that it could be appropriate to begin to reduce the size of the Federal Reserve’s balance sheet relatively soon after beginning to raise the federal funds rate,” the minutes said. 

At the conclusion of the December meeting, the FOMC announced it would wind down the Fed’s bond-buying program at a faster pace than first outlined at the previous meeting in early November, citing rising risks from inflation. With the new schedule, central banks are on track to end purchases by March.

An anonymous forecast published following the meeting showed that Fed officials agreed they needed to start raising rates this year. This marked a change from September’s previous forecasts, where the FOMC was split on this question.

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