New York Federal Reserve President William Dudley said Thursday that an interest rate increase by the central bank remained possible this year if economic data stayed "in line" with forecasts.
But Dudley, vice chairman of the Federal Open Market Committee (FOMC), the Fed policy board, said recent signs suggested the economy is slowing.
Gently dipping into an open debate among Fed officials over whether the economy is ready for the first rate hike in over nine years, Dudley held off from any direct predictions, noting in a talk at the Brookings Institution that "there's a lot of data between now and the end of the year."
"There is some news that suggests that the economy is slowing down," he said, pointing to sluggish retail sales and the dampening effect on trade of the strong dollar.
Asked whether a long-predicted increase in the near-zero benchmark federal funds rate could happen by year-end, he was cautious, stressing any decision is dependent on the data.
But he added that if the economy moves "in line" with what the Fed forecasts, he would favor a hike.
"What is not clear is how the economy is going to perform," he said.
Fed Chair Janet Yellen has repeatedly said this year that an increase in the interest rate, near zero since 2008, was likely by year-end. She repeated the prediction on September 24, while as usual stressing that the move would be "data-dependent."
The Fed funds rate level has a huge impact on global interest rates and speculation on an increase has spurred months of greater volatility in markets worldwide.
But since Yellen last spoke, US economic data has come in weaker than expected, especially the numbers on the September jobs market released on October 2.
Key indicators for Fed monetary policy -- inflation, job creation, and wages -- all have been weaker than expected. And the strong dollar has hit US exports, another drag on economic growth.
Earlier this week two other FOMC members, Lael Brainard and Daniel Tarullo, said they preferred to wait until 2016 to take the step.
And Fed Vice Chair Stanley Fischer said last week that, while in September he had assumed the economy would stay strong enough for a rate hike this year, there were some weak signs that require monitoring.
"Considerable uncertainties also surround the outlook for economic activity," he said.
The FOMC has two more meetings scheduled this year: October 27-28 and December 15-16.