People take pictures of the Federal Reserve building in Washington, DC on Aug 6, 2021. (DANIEL SLIM / AFP)

WASHINGTON - Most US Federal Reserve officials agreed last month that the central bank would start tapering asset purchases this year if the US economy were to evolve broadly as they anticipated, according to the minutes of the Fed's recent policy meeting released Wednesday.

The Fed is currently purchasing US$80 billion in US Treasury securities and US$40 billion in agency mortgage-backed securities per month

"Various participants commented that economic and financial conditions would likely warrant a reduction in coming months," the Fed said in the minutes of its July 27-28 meeting.

But several other Fed officials indicated that a reduction in the pace of asset purchases was more likely to become appropriate early next year, according to the minutes.

The Fed has pledged to keep its benchmark interest rate unchanged at the record-low level of near zero, while continuing its asset purchase program at least at the current pace of US$120 billion per month until "substantial further progress" has been made on employment and inflation.

The minutes noted that the Fed's standard of "substantial further progress" toward the maximum-employment goal "had not yet been met," while the inflation goal had been achieved.

"Participants observed that the inflation rate had increased notably and expected that it would likely remain elevated in coming months before moderating," the minutes said.

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The minutes also showed that most Fed officials saw benefits in reducing the pace of net purchases of US Treasury securities and agency mortgage-backed securities proportionally "in order to end both sets of purchases at the same time."

The Fed is currently purchasing US$80 billion in US Treasury securities and US$40 billion in agency mortgage-backed securities per month.

The minutes came as several Fed officials, including Dallas Federal Reserve Bank President Robert Kaplan and Boston Federal Reserve Bank President Eric Rosengren, have publicly endorsed a plan to announce tapering asset purchases as soon as September.

"The reason I'm saying we ought to begin the tapering soon is I think these purchases are very well equipped to stimulate demand. But we don't have a demand problem in the economy," Kaplan told CNBC last week, adding tapering soon would give the Fed more flexibility to be patient on raising interest rates.