WASHINGTON (AP) — Federal Reserve officials signaled in discussions earlier this month that they would likely begin reducing the Fed's huge portfolio of bond holdings later this year, a step that could cause borrowing rates to rise.

The minutes of the Fed's meeting three weeks ago show that officials not only talked about starting the reduction of bond holdings this year but expressed general approval for a plan on how the bond sales should proceed. The Fed would establish a cap on the size of maturing bonds that would be sold each month and release a schedule for gradually raising that cap.

The first signal from the Fed in April that it was considering a move to start reducing its $4.5 trillion portfolio this year had initially jolted investors.