Many of the Federal Reserve’s policymakers said they should be ready to lift short-term interest rates again “fairly soon”, minutes from the last gathering revealed, setting the stage for intense debate at upcoming meetings as the US economy strengthens.

Minutes from the Fed’s latest meeting, at which it held rates unchanged, reflect hefty uncertainty over the impact of potential tax cuts and other White House economic policies, with participants admitting it would be “some time” before the outlook becomes clearer.

But the record also shows a number of officials arguing that the Fed should nevertheless get ready to act again if the jobs market and inflation numbers were in line with expectations or stronger than forecast.

The central bank’s next meeting is March 14-15, and some policymakers have said a move should be on the cards at that gathering. Before the release of the minutes on Wednesday markets were putting the chances of a March rate rise at around one in five, according to CME Group analysis.

After lifting rates twice in two years, Janet Yellen and her fellow rate-setters are contemplating stepping up the pace of increases amid accelerating economic growth and the prospect of a tax-cutting package from the Republican-controlled Congress.

Significantly, participants in the Fed’s latest rate-setting meeting, held on January 31 and February 1, agreed to kick-start a debate in forthcoming meetings over reductions in the central bank’s bloated balance sheet as they move policy in the direction of more normal settings.

This reflects a growing confidence in the central bank that the economic cycle is on track and that the economy can withstand tighter policy.

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