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Federal Reserve officials are signaling that they will take a more aggressive approach to fighting high inflation in the coming months – actions that will make borrowing sharply more expensive for consumers and businesses and heighten risks to the economy.

In minutes from their policy meeting three weeks ago released Wednesday, Fed officials said that aggressive half-point rate hikes, rather than traditional quarter-point increases – “could be appropriate” multiple times this year. At last month’s meeting, many of the Fed policymakers favoured a half-point increase, the minutes said, but held off because of the uncertainties created by Russia’s invasion of Ukraine. Instead, the Fed raised its key short-term rate by a quarter-point and signaled that it planned to continue raising rates well into next year.

The minutes said the Fed is also moving closer to rapidly shrinking its huge $9 trillion stockpile of bonds in the coming months, a move that would contribute to higher borrowing costs. The policymakers said they would likely cut their holdings by about $95 billion a month – nearly double the pace they implemented five years ago when they last shrank their balance sheet.

The plan to quickly draw down their bond holdings marks the latest move by Fed officials to accelerate their inflation-fighting efforts. Prices are rising at the fastest pace in four decades, and the officials in recent speeches have expressed increasing concern about getting inflation under control.

Financial markets now expect much steeper hikes this year than Fed officials had signaled as recently as their meeting in mid-March.

Higher rates from the Fed will heighten borrowing costs for mortgages, auto loans, credit cards and corporate loans. In doing so, the Fed hopes to cool economic growth and rising wages enough to rein in high inflation, which has caused hardships for millions of households and poses a severe political threat to President Joe Biden.

Many economists have said they worry that the Fed has waited too long to begin raising rates and that the policymakers might end up responding so aggressively as to trigger a recession.

Chair Jerome Powell opened the door two weeks ago to increasing rates by as much as a half-point at upcoming meetings, rather than by a traditional quarter-point. The Fed hasn’t carried out any half-point rate increases since 2000. Lael Brainard, a key member of the Fed’s Board of Governors, and other officials have also made clear that such sharp increases are possible. Most economists now expect the Fed to raise rates by a half-point at both its May and June meetings.

In a speech Tuesday, Brainard underscored the Fed’s increasing aggressiveness by saying that the central bank’s bond holdings will “shrink considerably more rapidly” over “a much shorter period” than the last time the Fed reduced its balance sheet, from 2017-2019. At that time, the balance sheet was about $4.5 trillion. Now, it’s twice as large.

The Fed bought trillions of dollars of Treasurys and mortgage-backed securities after the pandemic hammered the economy, with the goal of lowering longer-term borrowing rates. It also cut its short-term benchmark rate to near zero. Last month, it increased that rate to a range between 0.25% and 0.5%, its first increase in three years.

As a sign of how fast the Fed is reversing its policy, the last time the Fed purchased bonds, there was a three-year gap between when it stopped its purchases, in 2014, and when it began reducing the balance sheet, in 2017. Now that shift is likely to happen in as few as three months, economists say.

Brainard’s remarks caused a sharp rise in the interest rate on the 10-year Treasury note, a key rate that influences mortgage rates, business loans and other borrowing costs. On Wednesday, that rate reached 2.6%, up from 2.3% just a week earlier, a sharp increase for that rate. A month ago, it was just 1.7%.

Shorter-term bond yields have jumped even higher, in some cases to above the 10-year yield, a pattern that has in the past been seen as a sign of an impending recession. Fed officials say, however, that shorter-term bond market yields aren’t flashing the same warning signals.