In a bid to keep the U.S. economy from overheating amid high inflation and near-full employment, Federal Reserve officials are preparing to move more quickly than they did the last time they tightened monetary policy.

Prospects for another year of growth above the economy's speed limit, with inflation already strong—along with a larger balance sheet that's suppressing longer-term borrowing costs—"could warrant a potentially faster pace of policy rate normalization," according to minutes from the December 14-15 Federal Open Market Committee (FOMC) meeting.

Financial markets interpreted the comments as unequivocally hawkish. Traders raised bets on an interest-rate hike as soon as March to around an 80 percent probability, while the S&P 500 stock index slumped by 1.9 percent at the close, the biggest drop in more than a month.

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