Sharp disagreement among Federal Reserve members

NEW YORK (CNNMoney) -- Members of the Federal Reserve are in sharp disagreement about how to address rising prices.

The central bank might need to tighten the reins on the economy before the end of the year to stave off inflation, said some members of the central bank's policy-setting body.

But others appeared comfortable holding off on taking any action, according to the minutes of the Fed's March 15 meeting, released Tuesday.

"A few participants indicated that economic conditions might warrant a move toward less-accommodative monetary policy this year," read the minutes -- Fed-speak for raising interest rates or selling assets to try to curb inflation.

"A few others noted that exceptional policy accommodation could be appropriate beyond 2011."

Last year, the Fed embarked on a huge round of asset purchases designed to spur lending by pumping trillions into economy, known as quantitative easing. This most recent effort, called QE2 because it is the second round of such purchases, is due to be completed in June.

Rising oil and other commodity prices over the last few months had sparked debate among members about whether the Fed should continue the program, and risk prices getting out of hand.

Some of the more vocal inflation hawks at the Fed have expressed concern that the policy could lead to a spike in prices down the road.

Nevertheless, none of the members objected to continuing the program through to completion at the March meeting, though some left the door open for an early wind-down of the asset purchases at a later date.

"A few members noted that evidence of a stronger recovery, or of higher inflation or rising inflation expectations, could make it appropriate to reduce the pace or overall size of the purchase program."

Members also reported that their business contacts "were passing on at least a portion of these higher costs to their customers or that they planned to try to do so later this year."

But the good news is that the minutes found broad agreement among members that the economic recovery was on "firmer footing" than at the January meeting.

The fed funds rate, the Fed's key interest rate used as a benchmark for a wide variety of business and consumer lending, has been at or near 0% since December 2008.

Once the $600 billion in Treasury purchases planned under QE2 are completed, the Fed will need to decide how and when to raise rates or start unwinding the trillions in purchases already made. But those issues remain in dispute among the Fed's ranks.

Last week Minneapolis Fed President Narayana Kocherlakota said the central bank could raise interest rates by the end of this year.