A top Federal Reserve official said Friday he had seen enough healing in the U.S. labor market to warrant raising interest rates soon.
Richmond Fed President Jeffrey Lacker, who had advocated for a rate hike in June and will have a vote at the Fed's Sept. 16-17 policy meeting, said the U.S. economy no longer needs interest rates near zero.
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"It's time to align our monetary policy with the significant progress we have made," Lacker said in prepared remarks titled "The Case Against Further Delay."
Lacker's comments came just minutes before the Labor Department was due to release its monthly employment report for August, which was expected to show robust job growth.
After the jobs number was released, Lacker called the labor market "good" and said it did not change the outlook for monetary policy.
Several Fed policymakers have said the report would be critical for the central bank's decision over whether to raise rates this month.
Lacker said the healing in the job market needed for a hike have already materialized, despite the fact that the jobs report disappointed.
"It's quite unlikely that a one-month blip would materially alter the labor market picture or, for that matter, the monetary policy outlook," he said.
Lacker said the strongest evidence supporting higher rates was that consumer spending had picked up substantially. This was probably the result of stronger earnings by families and expectations the economy would continue to improve.
The labor market was probably already at full strength, he said, and there were already signs that wages could rise at a faster clip.
"Over the last year or so, reports of difficulty finding and hiring qualified workers have become notably more widespread and persistent," he said, referring to reports in his region.
Lacker said no discussion of the economy's state would be complete without considering recent volatility in financial markets.
Worries over the strength of China's economy appear to have prompted the volatility, he said, but he noted that developments in China were unlikely to have a direct impact on U.S. economy.