Federal Reserve

Unintended QE Consequences a Concern: Fed's Lockhart

Outlook on the Economy With Fed's Lockhart

Atlanta Federal Reserve President Dennis Lockhart told CNBC on Thursday a few more months of solid economic data coupled with a "substantial improvement" in the jobs picture are needed before the central bank would consider tightening policy.

"We need ... evidence that the recovery is moving ahead," Lockhart said in a "Squawk Box" interview. "The key is the unemployment rate, job creation, [and] initial claims [outlook]."

Lockhart, who is considered a moderate, admitted that policymakers are worried about the unintended consequences of their massive bond-buying program, such as inflation. The Fed is currently buying $85 billion in Treasurys and mortgage-backed securities each month to push down long-term interest rates and encourage hiring.

(Read More: Bond Buying Could Cool This Summer: Fed's Williams)

In a speech Wednesday, San Francisco Fed President John Williams said the Fed could begin cutting back on those bond purchases this summer, if the economy continues to pick up steam.

Reacting to those comments, Lockhart told CNBC that he "wouldn't totally rule it out."

He called for a credible long-term deficit-reduction plan from Washington. "It doesn't have to solve the problem immediately. ... So really it's the longer term 'grand bargain' that I think is the most important thing."

(Read More: Fed Gov Tarullo on QE and 'Too Big to Fail')

He also said businesses seem to be more upbeat about the economy, though they are still cautious about hiring.

By CNBC's Matthew J. Belvedere; Follow him on Twitter @Matt_SquawkCNBC. Reuters also contributed to this report.