Fed's Dudley: Rate hike appropriate later this year

A Federal Reserve interest rate hike seems appropriate later this year despite muted growth in the second quarter, a top Fed official said Friday.

The timing of a move to hike rates depends largely on economic outlook, said William Dudley, president of the New York Federal Reserve, in prepared remarks Friday afternoon. He added that he expects U.S. growth to pick up, saying he has greater confidence inflation is moving back to the central bank's 2 percent target.

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Dudley—a voting member of the Fed's policy making committee—noted that he sees a shallow increase for rates. "Turbulence" in markets seems likely when the central increases rates, he said. (Tweet this)

William Dudley, president and chief executive officer of the Federal Reserve Bank of New York.
Michael Nagle | Bloomberg | Getty Images
William Dudley, president and chief executive officer of the Federal Reserve Bank of New York.

His remarks came on the heels of the government's monthly jobs report on Friday morning. The U.S. economy added a better-than-expected 280,000 jobs in May.

Wages rose 8 cents an hour, equating to an annualized increase of 2.3 percent.

Read MoreNonfarm payrolls total 280,000; unemployment rate at 5.5%

The job market still has "some ways to go," Dudley said. Wage gains are higher than in recent years, and a tightening labor market could eventually lead to more progress on wages, he noted.

The central bank's policy making committee has repeatedly stressed that a move to hike interest rates would depend on economic data.

Dudley's comments follow Fed Governor Daniel Tarullo's assertions on Thursday that second-quarter data indicate the U.S. economy has lost momentum. Earlier this week, Governor Lael Brainaird also said the economy has yet to show signs of a rebound after a sluggish start to the year.

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The government said the U.S. economy contracted at a 0.7 percent annual rate in the first quarter.