Federal Reserve officials in January started to debate when to begin raising interest rates, with a few arguing they might need to move sooner than expected.

"A few participants raised the possibility that it might be appropriate to increase the federal funds rate relatively soon," according to minutes of the Jan. 28-29 meeting, released Wednesday after the customary three-week delay.

Such a position isn't the consensus view at the Fed. Economic projections released by the Fed in December showed just two officials thought it would be appropriate to raise rates this year, while a dozen officials thought 2015 would be the time to start. The January meeting minutes don't say exactly how many thought the Fed might need to raise rates this year.

The minutes, however, indicate that the timing of the first increase has finally come onto the Fed's agenda after years of interest rates pinned near zero. Officials in January saw plenty of data points to reinforce their confidence that economic growth is strengthening, the minutes showed.

"The economy is much closer to normal than what we're used to thinking about over the last five years," St. Louis Fed President James Bullard said Wednesday in an interview with The Wall Street Journal.

One of the Fed officials who raised the rate-increase issue cited evidence that the interest rate needed to ensure inflation remains in check—the equilibrium real interest rate—had moved higher than it has been in the past, the minutes said. "A couple" pointed to standard policy rules that suggested that the Fed's benchmark interest rate "should be raised above its effective lower bound before the middle of this year," the minutes said.

Other Fed officials pushed back against this view, arguing that current conditions, such as the lingering effects of the financial crisis, made standard policy rules inappropriate guides at the present time.

The minutes also noted that "several" officials believed the market's expectations for interest rates "were reasonably well aligned" with their own expectations. Trading in markets where investors bet on what the Fed will do show investors expect the Fed to keep short-term rates near zero well into 2015.

"Currently, the market believes the Fed to be good to its word and that the short rate of interest will remain welded to the spot," Andrew Wilkinson, chief market analyst with Interactive Brokers LLC said in a note.

Overall, the minutes showed that officials appear on track to keep reducing the pace of the Fed's monthly bond purchases in steady steps over the course of the year as long as the economy continues to perform as they expect.

At the conclusion of the January meeting, the central bank said it was cutting the monthly pace of bond purchases to $65 billion, from $75 billion. The minutes showed that several officials believe the Fed should stick to its strategy of cutting its monthly purchases by $10 billion at each of its policy meetings "in the absence of an appreciable change in the economic outlook." The bond purchases were begun in September 2012 to help lower long-term interest rates to encourage spending, hiring and investment.

A few officials fretted about low inflation readings and other signs of slack in the economy, but even they supported continuing to scale back the bond-buying program, the minutes showed. "These participants judged…that a pause in the reduction of purchases was not justified at this stage, especially in light of the strength of the economy in the second half of 2013."

Officials also engaged in a wide-ranging discussion about what to do about their guidance on when they will raise short-term rates, which have been pinned near zero since late 2008. The Fed has been saying for some time that they won't consider raising rates until the jobless rate reaches 6.5%, as long as inflation doesn't rise above 2.5%.

The jobless rate has fallen toward that threshold far faster than Fed officials expected when they set it, to 6.6% in January. Given the jobless rate's proximity to their threshold, officials at the January meeting agreed that "it would soon be appropriate" for the Fed to adjust its guidance.

But there appeared to be little agreement on exactly what changes the Fed should make. Some officials thought the central bank should change its unemployment threshold, while others advocated a "qualitative approach" of providing the public with more information on what other factors officials would consider when making the decision to raise rates.

San Francisco Fed President John Williams said Wednesday on CNBC that the threshold-based guidance had served the Fed well, but as the economy continues to improve "it's time to move away from these numerical markers and just go back to a more qualitative description of our policy framework and the drivers of our decisions."

Mr. Bullard also said he favored scrapping the numerical thresholds for more-qualitative guidance.
Several officials argued that the Fed should emphasize that risks to the stability of the financial system are among the factors guiding their decision, the minutes said. Others thought the Fed should stress that it is willing to keep rates low for longer if inflation remains below their 2% official target.

The minutes show that officials discussed the turmoil in emerging market countries, even though officials declined to mention these developments in their formal policy statement. Officials saw the developments in emerging markets as having had "only a limited effect to date" on U.S. financial markets. Still, officials believed it prudent to keep watching events abroad carefully, both in the emerging markets as well as "the financing situation of the Puerto Rican government," the minutes said. Puerto Rico's debt was downgraded to junk status by all three major credit-rating firms earlier this year.

Officials "noted that recent developments in several emerging market economies, if they continued could pose downside risks to the outlook," the minutes said.