The Federal Reserve building is seen on March 19, 2021 in Washington, DC. (DANIEL SLIM / AFP)

WASHINGTON – US Federal Reserve officials anticipated earlier and faster interest rate hikes than previously expected as the economy continues to recover and inflation remains elevated, according to the minutes of the Fed's latest policy meeting released Wednesday.

"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," the central bank said in the minutes of its Dec 14-15 meeting.

The median respondent's projected timing for the first increase in the target range for the federal funds rate moved earlier from the first quarter of 2023 to June 2022, according to the minutes.

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Fed officials' median interest rate projections released mid-December showed that the central bank could raise the federal funds rate – the benchmark interest rate – three times this year from its current record-low level of near zero, up from just one rate hike projected in September.

The announcement in mid-December put the Fed on track to end asset purchases by March, three months earlier than initially planned

That marks a major shift from the last time forecasts were updated in September when 18 Fed officials were evenly split over the need to raise rates in 2022.

After the mid-December policy meeting, the Fed laid out a plan to reduce its monthly asset purchases by $30 billion starting in January, doubling the pace it announced a month earlier, in response to rising inflation pressures.

The central bank began in November to reduce its monthly asset purchase program of $120 billion by $15 billion. The announcement in mid-December put the central bank on track to end asset purchases by March, three months earlier than initially planned, as it exits from the ultra-loose monetary policy enacted at the start of the pandemic.

The Fed's change of plan came just a few days after Labor Department data showed that US consumer price index (CPI) rose 6.8 percent in November from a year earlier, the fastest annual pace in almost 40 years. CPI rose 0.8 percent for the month.

According to a recent survey released by the National Association for Business Economics, most economists believed US inflation will remain above the central bank's target of 2 percent over the next three years amid rising wages and strong demand for goods and services.

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The newly released Fed minutes showed that 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.

"Some participants judged that a less accommodative future stance of policy would likely be warranted and that the Committee should convey a strong commitment to address elevated inflation pressures," the minutes added, referring to the Federal Open Market Committee, the Fed's policy-making body.