Kansas City Fed President Esther George became latest voice in the rate-hike chorus, saying the central bank should increase rates "sooner rather than later."
In a speech Friday morning, George encouraged her fellow central bankers to avoid a situation where the Fed waited too long to hike and thus stoked fears in the market.
George has been a consistent dissenter this year at Federal Open Market Committee meetings, encouraging rate hikes while her counterparts have held the line.
Speaking to a joint conference of the Dallas and Kansas City Feds, in Houston, George warned that allowing the jobless rate to fall below what is considered full employment has caused problems in the past. The headline rate currently sits at 4.9 percent; the Fed generally considers full employment around 4.8 percent.
"The effect of allowing the economy to overheat in these cases produced short-term gains, but ultimately with longer-term costs," she said. "Consequently, I see moving sooner, rather than later, as taking into account the long and variable lags with which monetary policy operates, and reduces the potential for 'go-stop' types of policies that create volatility, rather than subdue it."
George said she expects a moderate growth pace, with job gains and wages supporting consumer spending. Inflation is progressing towards the Fed's 2 percent target, while low oil prices have yet to provide a significant boost to the economy, she added.
The market expects the Fed to hike its funds rate target a quarter-point at the December FOMC meeting. Traders don't foresee another hike until at least June, according to CME data.
"My view is that monetary policy should avoid deliberately stoking the risks that come with overheating the U.S. economy and instead, slowly raise the federal funds rate to promote maximum employment commensurate with the economy's long-run potential to increase production," George said.
This is a breaking news story. Check back here for updates.