The Federal Reserve is leaning toward an interest rate rise this year, even as early as next month, after two policymakers said conditions are right despite weak US economic growth in the first half.
Reuters is reporting that New York Fed President William Dudley thinks it’s “possible” to raise rates at the Sept. 20-21 policy meeting given evidence of wage gains and a tighter labor market that could boost inflation.
Dennis Lockhart of the Atlanta Fed said a hike next month is in play.
The comments, which prompted investors to boost bets on a rate hike, came nine days before the annual meeting of some of the world’s top central bankers in Jackson Hole, Wyoming, a venue the Fed often uses to telegraph policy plans.
As June’s shock UK vote to leave the European Union fades with little lasting effect on markets, the US economy is bouncing back from a meager 1 percent growth rate in the first six months of the year.
Employment surged in June and July, while on Tuesday data showed solid gains in industrial output and home building in the world’s largest economy.
“We’re edging closer towards the point in time where it will be appropriate I think to raise interest rates further,” Dudley, a permanent voter on policy and a close ally of Fed Chair Janet Yellen, said on the Fox Business Network.
The central bank raised interest rates from near zero in December last year, its first monetary policy tightening in nearly a decade, but it has since kept its policy rate unchanged amid financial market volatility and stalled economic growth.
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