Fed's Lockhart says he isn't ruling out a rate hike before year-end

Atlanta Federal Reserve President Dennis Lockhart said he will not rule out a rate hike in 2016.

"At this point, I don't rule out a rate increase at the next meeting or later in the year. We just have to wait and see how the data come in. The situation is maybe a little bit ambiguous, but I can imagine conditions in which we could have rate hike," he said Tuesday in an interview with CNBC's "Closing Bell."

While U.S. consumer spending data came in stronger than expected Tuesday morning, a lot of data points will still come between now and the Federal Open Market Committee's next meeting, which starts on September 20, Lockhart said.

In particular, the Fed will watch Friday's jobs report, following strong job growth in June. Economists polled by Reuters expect July non-farm payroll growth to come in at 175,000.

The Atlanta Fed president said he would like to see stronger economic conditions that would "justify" increasing the federal funds rate.

"I'd like to see the economy tell us that it's okay raise rates," Lockhart said.

He explained the FOMC is limited in its ability to act because interest rates are so low.

"When we're close to zero at the policy rate level, our options are more limited than if the policy rate is set higher," Lockhart said.