Federal Reserve officials discussed last month a quicker start to interest rate hikes after both job growth and inflation ran much higher than they expected, according to minutes released Wednesday.

During the December meeting of the Federal Open Market Committee (FOMC), several members of the Fed’s monetary policy arm suggested the bank may need to take quicker action to cool off the growing economy. 

“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 minutes read.

“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.”

The FOMC announced after last month’s meeting it would keep its baseline interest rate range between zero and 0.25 percent, but reduce its monthly purchases of Treasury and mortgage bonds at a quicker rate. 

The Fed slashed rates to that level and began purchasing at least $120 billion in bonds monthly in March 2020 as the emerging pandemic derailed the global economy. The U.S. has since recovered the vast majority of the 21 million jobs lost to the pandemic, replaced the gross domestic product lost to the coronavirus recession, and seen record-breaking increases in stock and housing prices. Even so, the rapid recovery and persistent pandemic-related constraints has fueled the highest annual increase in consumer prices in four decades.

While the U.S. added just 210,000 jobs in November, the unemployment rate plunged 0.4 percentage points to 4.2 percent and consumer price growth hit a four-decade high.

Several Fed officials said last month they believed the labor market was close or already at the level of strength necessary for the bank to begin hiking rates. Fed officials have held out on doing so as inflation rose to prevent cutting off further job gains, but saw growing risks of higher inflation in December.

“While participants generally continued to anticipate that inflation would decline significantly over the course of 2022 as supply constraints eased, almost all stated that they had revised up their forecasts of inflation for 2022 notably, and many did so for 2023 as well,” the minutes read.

“Many participants judged that, if the current pace of improvement continued, labor markets would fast approach maximum employment. Several participants remarked that they viewed labor market conditions as already largely consistent with maximum employment.”

Fed officials expected to hike rates at a faster pace in 2022 than previously, according to projections released at the end of the meeting on Dec. 16. 

Ten of the 18 members of the FOMC projected that the Fed would hike rates three times in 2022, bringing the baseline interest rate range to 0.75 to 1 percent. Five members expected two hikes, two members projected four hikes and one member expected just one rate hike in 2022.

Only three FOMC members projected at least two rate hikes next year in the Fed’s September estimates.