US Fed Reserve Officials Point to Mid-2015 as Likely Date for a Rate-Hike
US Federal Reserve Vice Chair Stanley Fischer at the World Bank/IMF Annual Meeting in Washington on 9 October.Reuters

The US Federal Reserve will possibly start raising interest rates around the middle of 2015, according to two top officials at the American central bank.

But both said the exact timing of a rate hike will depend on the health of the world's leading economy.

Fed Vice Chairman Stanley Fischer said in Washington: "What we think now is that the capital markets have it more or less right but we don't ourselves know when we're going to do it.

"On the basis of our forecasts of the data ... it looks like markets more or less have it right - somewhere in the middle of the year."

Meanwhile, speaking in Las Vegas on 9 October, the president of the San Francisco Federal Reserve Bank, John Williams, said a mid-2015 rate rise was "a reasonable guess to my mind."

"If the economy or inflation heat up faster than I expect, we should lift rates sooner," said Williams adding that if progress on those fronts slowed, the liftoff should be delayed.

Williams also said that any difference between the market's view and his own of the timing of liftoff was "small", Reuters reported.

Barclays said in a note to clients: "We see nothing in the FOMC September minutes that leads us to alter our view that the committee will raise rates beginning in June of [2015].

"This remains the case even though the risks to US growth from a weaker global growth outlook or a stronger dollar have risen since the September meeting."

Bullard, Lacker and Dudley

James Bullard, president of the St. Louis Fed, warned market players on 9 October, saying that financial markets were making a "mistake" in betting that borrowing costs will only rise later in 2015.

Bullard, alluding to strengthening labour market and inflation guages, wants the Fed to start raising rates in the first quarter of 2015.

But Jeffrey Lacker, chief of the Richmond Fed, speaking in North Carolina, said he was not alarmed by any mismatch in the outlook for a rate hike. "The gap is most likely accounted for by differences in views on how the data is going to come in," he said.

Lacker, among the most hawkish of Fed policymakers, said he probably is on the "early side" among his colleagues in terms of expectations for when rates should rise.

Earlier in the week, William Dudley, the head of the New York Fed, also pointed to mid-2015 as the probable date for a rate-hike.

The world's most powerful central bank has left rates near zero since 2008 and has nearly quadrupled its balance sheet to over $4tn through a series of bond buying programmes, attempts to push down borrowing costs and boost hiring.

With the American unemployment rate hovering at 5.9% and approaching what the central bank views as consistent with full employment, officials plan to conclude their asset buys this month.