Federal Reserve officials debated this month whether the bank should be prepared to taper asset purchases and raise interest rates quicker than they once expected as inflation spiked, according to minutes released Wednesday.
Minutes from the Nov. 2-3 meeting of the Federal Open Market Committee, the Fed's monetary policy panel, showed growing concern among some members about the bank's impact on rising price growth.
Even so, other officials warned against shifting course too quickly as supply chains and the economy at large continued to work through pandemic-related constraints and pressures.
"Various participants noted that the Committee should be prepared to adjust the pace of asset purchases and raise the target range for the federal funds rate sooner than participants currently anticipated if inflation continued to run higher than levels consistent with the Committee's objectives," the minutes read.
"At the same time, because of the continuing considerable uncertainty about developments in supply chains, production logistics, and the course of the virus, a number of participants stressed that a patient attitude toward incoming data remained appropriate to allow for careful evaluation of evolving supply chain developments and their implications for the labor market and inflation."
Consumer prices rose 0.6 percent in October and 5 percent in the 12 months leading into it, according to the personal consumption expenditures price index, the Fed's preferred gauge of inflation.
The Fed's ideal annual rate of inflation is roughly 2 percent, but the bank recently adopted a strategy that called for allowing price and wage increases to run slightly higher to make up for more than a decade of sluggish growth. Even so, inflation has risen higher and stayed at elevated levels for much longer than Fed officials expected earlier this year.
Fed Chairman Jerome Powell, who was renominated this week by President Biden, is among several bank officials who've warned against raising rates abruptly to halt inflation that is driven in large part by the pandemic. Yet a growing number of Fed officials have called for the bank to start pulling back on stimulus at a much faster pace.
The Fed announced after the November meeting that it would reduce its monthly purchases of Treasury and mortgage bonds by up to $15 billion, but did not commit to raising rates sooner. Further increases in the inflation rate could prompt the Fed to accelerate its tapering of bond purchases, which began in March 2020 to keep financial markets flowing amid the onset of the pandemic.