(Reuters) - The Federal Reserve could possibly raise U.S. interest rates as soon as next month as the labour market tightens and as evidence builds of wage gains, influential New York Fed President William Dudley said on Tuesday.
"We're edging closer towards the point in time where it will be appropriate I think to raise interest rates further," Dudley said on Fox Business Network. "It's possible" to hike rates at a mid-September policy meeting, he said, "we'll have to see where the data falls (and also watch) the broad supports for the economy."
The U.S. central bank raised rates from near zero in December, its first tightening in nearly a decade, but it has since stood pat amid financial market volatility and stalled U.S. economic growth.
Traders see only a 12 percent chance of a rate hike at the Fed's Sept. 20-21 meeting, with a better chances of a move in December, after the U.S. presidential election.
Given the U.S. economy grew at only a 1-percent rate in the first half of the year, "we probably don't have a lot of monetary policy tightenings to do over time," said Dudley, a permanent voter on rates and a close ally of Fed Chair Janet Yellen.
"But the labour market is getting tighter and we're starting to see signs of wage gains starting to accelerate, so I think we're getting closer to that point in time when it will be appropriate to actually raise short-term rates again," he added.
Asked about inflation, which has remained low, Dudley said the question is whether there is enough economic growth to put pressure on resources that pushes up wages and, ultimately, inflation. "So far we seem to be on that trajectory and we'll have to see how it plays out in coming months."