Some Fed officials want to announce the beginning of the process "within a couple of months", according to minutes of the USA central bank's June meeting released Wednesday.
Stocks start mixed ahead of this afternoon's release of the minutes from the Federal Reserve's latest meeting; S&P and Dow -0.1%, Nasdaq +0.1%.
But a few Fed officials were less comfortable than the prospect of higher rates as implied by the central bank's June projections, saying that too quick a path might prevent a "sustained" return to inflation at that level.
The minutes from the June meeting offered no new indications of when the next rate hike would come.
"Members agreed that, in determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee would assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation".
She said the Fed eager to keep increasing interest rates at a gradual pace to avoid a situation in which it would need to raise rates more quickly to offset inflation, which could destabilize the economy.
The slow start to the year has led some economists to caution against additional interest rate hikes this year. Some Fed officials suggested at the June meeting that this reflects both the possibility of slower economic growth and the influence of the Fed's own bond holdings.
On the other side of the Fed's dual mandate, the jobless rate declined to a 16-year low in May of 4.3 percent, beneath most Fed officials' estimate of the maximum use of labor resources. Meanwhile, U.S. officials will soon confront the challenge of raising the debt ceiling to continue to fund the government.
The minutes also showed central bankers divided over precisely when to begin reducing the Fed's massive balance sheet, a task that they have indicated they will begin before the end of the year. With the USA economic picture beginning to show cracks, there is reason to believe a September rate hike may not be advisable. But Ms. Yellen downplayed the extent of the Fed's concerns at a news conference after the Fed's June meeting.
Financial conditions were also debated at the meeting, with some participants arguing that "increased risk tolerance" among investors could be lifting asset prices. But at some point, increases to the Fed's benchmark interest rate and reductions to its balance sheet will begin to affect bond markets and raise the price of loans for everyday Americans, he said. The minutes said some participants see evidence that investors are taking larger risks and a few are concerned about "a buildup of risks to financial stability".