The Federal Reserve (search) concluded at its policy-setting session last month that risks of inflation remained balanced for now, but they were clearly concerned about the potential for higher prices, minutes of the meeting issued Tuesday showed.

"A number of participants cited the recent depreciation of the dollar on foreign exchange markets, elevated energy costs and the possibility of a slowing in underlying productivity growth as factors tending to boost the upside risks to their inflation outlook," the minutes of the Dec. 14 meeting said, adding: "On net, they saw the risks to stable underlying inflation as still balanced."

The minutes were the first released under a new policy adopted at the Dec. 14 gathering to speed up publication by issuing minutes three weeks after each of the eight-times-a-year meetings are held.

The minutes said Federal Open Market Committee (search) members felt faster release of the information "would help markets interpret economic developments and predict the course of interest rates."

At the Dec. 14 meeting, the Fed raised rates for a fifth time in 2004, up another quarter-percentage point to 2.25 percent. The central bank is widely expected to continue raising them when the FOMC next meets on Feb. 1-2.

Until now, the Fed has waited until after the following meeting to issue minutes, which market watchers say has limited their value as an insight into policymakers' thinking while reducing their significance as a signaling device for the Fed.

The minutes say that "a number of participants cited developments that could pose upside inflation risks."

Even though oil prices have moderated, they remain above levels in early 2004 and that, along with a cheaper dollar, that makes imports more costly and could reduce competitive pressures on many industries.

One factor that has helped keep U.S. inflation low is a reluctance by companies to push prices up for fear of losing customers. So businesses have sought to keep profits up by trimming costs in other areas, but those savings are limited.

"A few participants also noted that uncertainty about the extent of resource slack in the economy was considerable and that it was possible the economy could soon be operating close to potential," the minutes said.

Some increase was noted in short-term rates (search) on U.S. Treasury nominal and inflation-indexed securities (search) as well, which the Fed worried "might be a warning sign that expectations were not as well anchored as they had been over the summer."

For all the concern, though, "participants generally expected that inflation would remain low in the foreseeable future."