Fed members debate raising interest rates

Members of the Federal Reserve are debating whether the economy has recovered enough to justify increasing interest rates, according to meeting minutes made public on Wednesday.

Most economists think that the central bank will begin to raise its interest rates early next year to control inflation, but Federal Reserve Chairwoman Janet Yellen has said the action could come sooner if the economy improves faster than expected.

“Participants generally agreed that both the recent improvement in labor market conditions and the cumulative progress over the past year had been greater than anticipated and that labor market conditions had moved noticeably closer to those viewed as normal in the longer run,” according to the minutes.

"Most participants indicated that any change in their expectations for the appropriate timing of the first increase in the federal funds rate would depend on further information on the trajectories of economic activity, the labor market, and inflation."

Fed policymakers "differed, however, in their assessments of the remaining degree of labor market slack and how to measure it," the minutes said.

"A few argued that the unemployment rate continues to serve as a reliable summary statistic for the overall state of the labor market and thought that it should be the Committee's principal focus for evaluating labor market conditions."

But others were less convinced, arguing that current labor market conditions don't match up with their assessments of "normal levels."

The unemployment rate has steadily declined in recent months and now stands at 6.1 percent.

Yellen could offer more clues about interest rate hikes on Friday, when she is scheduled to speak at annual banking conference in Jackson Hole, Wyo. The topic of her speech is reportedly labor markets.