US rate hike in September ‘possible'

An influential member of the US central bank has said that an interest rate rise is “possible” in September.

“We’re edging closer towards the point in time where it will be appropriate I think to raise interest rates further,” said William Dudley, president of the New York Federal Reserve. He told Fox Business Network that, depending on the data, a rate hike was possible at the next policy meeting.

The Fed has three meetings left in 2016 and is expected to raise rates once. Data released Tuesday painted a mixed picture of the economy however. The US Labor Department reported inflation rose just 0.2% in July, the same rate as the previous two months. Excluding food and energy, prices rose just 0.1%, the slowest increase since March.

The Fed has said inflation is a key metric for deciding when it will raise interest rates. It has set a target of 2% inflation over the next few years, but according to its own measurement the annualised rate has been stuck at 1.6% since March. The stubbornly low inflation has been citied by the Fed as a reason for holding off on rate increases in past months despite improvements in the labour market and other area of the economy.