Fed minutes: Some want 'relatively prompt' rate hike, most say more data needed

When the Fed moves on rates
When the Fed moves on rates

Some members of the Federal Reserve's Open Market Committee want to make a "relatively prompt" rate hike based on the economy's progress, according to the minutes of the committee's last meeting.

But the minutes, released Wednesday, also showed that most members agreed more data was needed to move up the schedule of rate hikes.

"Many participants noted that if convergence toward the Committee's objectives occurred more quickly than expected, it might become appropriate to begin removing monetary policy accommodation sooner than they currently anticipated," the minutes stated.

"Indeed, some participants viewed the actual and expected progress toward the Committee's goals as sufficient to call for a relatively prompt move toward reducing policy accommodation to avoid overshooting the Committee's unemployment and inflation objectives over the medium term."

Read MoreLabor will be hot topic at Jackson Hole confab

Fed minutes, while not normally a market mover, put a mild jolt into trading action among those who fear an accelerated pace of rate increases. Stocks briefly surrendered gains after the release but turned back positive. However, rates moved higher, particularly the five-year Treasury note, which was up 5 basis points for the session.

El-Erian tweet

"This communication is a real action," Jacob Frankel, chairman of JPMorgan Chase International, told CNBC. "The very fact that you feel something has changed, the mood has changed, labor market seems to get closer to normal, that's a very important message that gives a clue about where they are going to go and how fast."

Andrew Harrer | Bloomberg | Getty Images

Amid some outward appearances of dissent—Philadelphia Fed President Charles Plosser voted against the FOMC statement following the meeting—there appeared to be comfort about the central bank's direction for now though concerns over the longer-term direction.

"The concerns of Philadelphia Fed President Charles Plosser are shared by more officials than his lone dissent suggested," Paul Sales, senior U.S. economist at Capital Economics, said in a note. "'Some participants' (which may be 3 or 4) thought the Fed was getting close enough to its dual mandate 'to call for a relatively prompt move toward reducing policy accommodation.' The same officials are concerned that rates will need to be raised some months after the Fed's asset purchases end in October, which is not consistent with waiting a 'considerable time.'"

At the July meeting, the Federal Reserve's Open Market Committee reduced its monthly bond purchasing program by another $10 billion and held its targeted funds rate near zero.

Future policy depends on what has become a moving target. The FOMC has moved away from yardsticks of 2 percent inflation and 6 percent unemployment as triggers for a rate increase and on to an approach that involves "macroprudential policies" that are more nebulous in nature.

"Should we fear it or should we hope for it? I for myself think that if you trust that the Fed is a group of responsible policy makers who always and have said already said when things normalize we will act on rates," Frankel said. "Then basically if they start rising rates it means that they project and give you the message we believe that things are sufficiently safe and robust, not to fear it."

The minutes also indicated a sense that the labor market has improved and moved closer to normal.

"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," the minutes said.

Read MoreThe poor get poorer: Low-wage jobs still dominate

—By CNBC's Jeff Cox. Michelle Fox and Ben Berkowitz contributed to this report.

This is a breaking news story. Check back here for updates.