Federal Reserve officials agreed last month that they should begin shrinking the central bank's $4.5 trillion balance sheet this year, reversing the stimulus measures taken in the wake of the financial crisis.
Minutes from the Fed's March monetary policy meeting in Washington revealed that the officials had discussed what to do with the balance sheet and that most members thought that beginning to shrink it "would likely be appropriate later this year."
Anticipation for Wednesday's minutes ran high among investors because of the expectation that they might reveal the Fed's plans for its swollen balance sheet, in light of the Fed having carried out two interest rate increases in recent months.
The Fed's holdings exploded in the wake of the financial crisis as the Fed sought monetary stimulus and have remained high since.
The Fed had total assets just under $1 trillion in fall 2008. But then the central bank rapidly bought up huge amounts of assets in an effort to stabilize the banking system. Later, it carried out two major bond-buying programs in an effort to boost financial markets, increase spending and prop up the economic recovery.
Under Fed Chairwoman Janet Yellen, the Fed stopped buying new bonds in October 2014, with the unemployment rate at 6.7 percent.
Since then, however, it has reinvested payments on the principal on those bonds on more bonds and rolled over securities that matured. As a result, its balance sheet has remained near $4.5 trillion for the past two years.
Yellen has said that the Fed's large balance sheet acts as stimulus on the economy. The question facing her now is how that stimulus could be withdrawn without slowing growth or creating trouble in financial markets.
Public comments from Fed officials made since the March meeting hinted at the possible direction the central bank might take.
William Dudley, the president of the Federal Reserve Bank of New York, suggested last week that the Fed might "taper" its reinvestments in bonds, meaning cutting back investments in new bonds gradually. The "taper" phrase is a throwback to the Fed's drawn-out deliberations over phasing out its quantitative easing program.
Last week, St. Louis Fed President James Bullard said the central bank should begin shrinking its balance sheet right away, rather than after further increases in the Fed's interest rate target.