This is an archived article that was published on sltrib.com in 2015, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Federal Reserve Bank of Atlanta President Dennis Lockhart said the first interest rate increase since 2006 will likely be warranted later this month or in December.

"The economy remains on a satisfactory track, and, speaking for myself, I see a liftoff decision later this year at the October or December FOMC meetings as likely appropriate," Lockhart said in prepared remarks Friday in New York, referring to the Federal Open Market Committee.

Lockhart supported the FOMC decision last month to leave interest rates unchanged, after market turmoil and slowing growth in China raised doubts about the U.S. outlook. The committee hesitated because it saw risks to its forecast that inflation would return to its 2 percent target as expected, according to minutes of the meeting released Thursday.

"The ambiguity of the moment reinforces the need to closely watch the vital signs of the economy over the coming weeks to determine if the outlook has changed," he said.

Lockhart, who has never dissented, said consumer activity will be a key signal that the U.S. economy can sustain its momentum despite the global slowdown.

"The consumer-based dimension of the economy has been robust for several months," Lockhart said to the Society of American Business Editors and Writers, even as manufacturing and exports have been hurt by a stronger U.S. dollar.

The Atlanta Fed's tracking estimate for the third quarter is a "relatively soft 1.1 percent," though much of the weakness is due to a swing in inventories.

Last month's employment report was "certainly disappointing" but didn't change the overall picture of improvement, with labor market slack continuing to be reduced in the third quarter, he said.

"In the third quarter, payroll job gains have averaged 167,000 per month. While this is a step down from the brisker pace of job growth we'd enjoyed over the first half of the year, it is still more than enough to accommodate the trend growth in the labor force," he said.

Lockhart also said financial market turmoil shouldn't be overly influential to the Fed.

"Financial market gyrations should be influential in a decision only to the extent they could plausibly affect real activity through pretty clear and understood channels," he said.

FOMC participants expect a rate increase this year, according to the forecasts released last month. Investors are less persuaded the central bank will follow through. Futures traders are pricing in an 10 percent probability of a rate increase at the October meeting and 39 percent increase in December, based on an assumption that the effective funds rate will settle at 0.375 percent after liftoff.

While U.S. unemployment has fallen to 5.1 percent, close to the Fed's estimate of full employment, inflation remains far from the goal. The Fed's preferred gauge of inflation has remained under its 2 percent goal since April 2012 and rose 0.3 percent in the year through August.