Fed says sharply higher rates may be needed to quell inflation

Federal Reserve officials were concerned at their meeting last month that consumers were increasingly anticipating higher inflation, and signaled that much higher interest rates could be needed to restrain price increases.

The policymakers also acknowledged that their rate hikes could weaken the economy, according to minutes from their June 14-15 meeting released Wednesday. But they suggested that such steps were necessary to slow price increases back to the Fed's 2% annual target.

The officials agreed the central bank needed to raise its benchmark interest rate to "restrictive" levels that would slow the economy's growth, and that if inflation persisted, "an even more restrictive stance could be appropriate."