Fed Lockhart says 2015 rate hike is still 'likely appropriate'

The US central bank could still hike interest rates this year, the president of the Atlanta Federal Reserve said on Friday.

Speaking in New York, Dennis Lockhart said a lift-off in interest rates in October or December was still "likely appropriate", given the recovery of the US economy remained on track.

Lockhart added that while there was "a touch more downside risk" than a couple of weeks ago in the wake of a disappointing September jobs report, the Fed still had a case to tighten its fiscal policy before 2016.

Following a weak job report last month, a number of analysts believe the Fed will not hike interest rates this year.

On Thursday, minutes from the latest Federal Open Market Committee meeting showed the central bank almost hiked interest rated but refrained as a result of the slowdown in China and its potential impact on the US.

According to the minutes, policymakers thought it was more prudent to wait for evidence that the economy had not deteriorated and that inflation would gradually move back toward towards the 2% annual target.

“The Fed have strayed off their well-worn path. The market has lost visibility on Fed’s policy path but the Fed members are not less confused,” said Ipek Ozkardeskaya, market analyst at London Capital Group.

“Unemployment and inflation targets were the foundation of Fed’s policy and these key economic indicators are now diverging from each other.”