NEW YORK: Two influential Federal Reserve policymakers on Friday reinforced the message that an interest rate hike is coming before year end, saying that while they expect to move, things could change that force the US central bank to delay again.

New York Fed President William Dudley and Dennis Lockhart of the Atlanta Fed each said they expected a policy tightening in 2015 despite some recent red flags. But they clearly left the door open to waiting until 2016 if it looks like the US economy is threatened by a global slowdown.

The pair, speaking separately in New York, raised questions over the likelihood they would be have enough information in hand to lift rates by an Oct. 27-28 policy meeting, suggesting that a meeting set for Dec. 15-16 may be earmarked for action.

“Based on my forecast, yes I am” expecting to raise rates this year, said Dudley, a close ally of Fed Chair Janet Yellen who has a permanent vote on policy.

“But it’s a forecast, and we’re going to get a lot of data between now and December. So it’s not a commitment,” he said on CNBC TV.

“There certainly is a risk that the economy evolves in a very different way than I expect, and obviously it would be totally inappropriate for me to not take that into consideration.”

In a relatively close call, the central bank held off on a rate hike last month in the face of a slowdown in China and elsewhere, financial market turbulence and falling commodity prices.

All of those could keep US inflation, now at 1.3 per cent, below the Fed’s 2 per cent target.—Reuters

Published in Dawn, October 10th , 2015

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