That comment echoed a speech by Fed Chair Janet Yellen last week, during which she said it would likely be appropriate to raise rates sometime this year.
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The US Federal Reserve has held interest rates at near zero levels since December 2008 and the interest rate has not been raised for nine years now.
Therefore, the pause from hereon could be a prolonged one unless there is a significant positive surprise on inflation.
It won’t come until the end of the week, but all eyes will be on Friday’s jobs report.
Yellen said Fed officials still think the depressive effects of the dollar and energy prices will fade, allowing inflation to return to the 2 percent level.
Williams expected the economy to grow at a 2.25-percent annual rate in the second half of 2015, which will push the unemployment rate down to below 5 percent later this year. The Fed stood pat while it took stock of unsettled global developments in the path of the US economy.
Inflation is expected to gain momentum in the near future, but this will be offset by falling global goods prices and almost 4 percent appreciation in the krona since August, despite several forex market interventions by the bank.
Chicago Federal Reserve President Charles Evans said Monday he supports waiting a bit longer before raising interest rates for the first time in a decade.
The Fed has two remaining meetings for this year, October 27-28 and December 15-16.
Ms. Yellen will speak again on Wednesday at the St. Louis Fed community banking research and policy conference.
On Monday morning, the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA) said its Personal Consumption Expenditure (PCE) Index increased by $54.9 million or 0.4% in August, or at the same rate as its increase a month earlier.
Regarding the impact of volatile overseas markets, Lockhart said that the Fed is “not focused on helping Wall Street“, rather focused on the risks to the broader economy.
Separately San Francisco Fed chief John Williams repeated that he expects the U.S. central bank to raise interest rates this year and sounded a warning over rapidly rising house prices, though he said they had not yet reached a “tipping point“. “Some of the market turmoil that we’ve seen over the last three or four weeks is related to China’s (economy) slowing down, for example”.
Purchasing Managers’ surveys on Thursday will give further clues to the strength of China’s economy, after a similar release this week showed factory activity at a 6-1/2 year low, while the central bank may also release FX reserves data.
What about inflation? It was mentioned 13 times in the Fed’s most recent policy statement, and has been stuck below the Fed’s 2 percent target.
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She also emphasized that the Fed has made no final decision about a rate hike.
