Fed's George says U.S. economy is ready for a rate hike: CNBC

Thu Aug 21, 2014 8:27am EDT

Kansas City Federal Reserve Bank President Esther George is pictured in the bank's boardroom in this handout photo courtesy of the Kansas City Federal Reserve. REUTERS/Kansas City Federal Reserve/Handout

Kansas City Federal Reserve Bank President Esther George is pictured in the bank's boardroom in this handout photo courtesy of the Kansas City Federal Reserve.

Credit: Reuters/Kansas City Federal Reserve/Handout

(Reuters) - The time has come for the Federal Reserve to raise interest rates, a top U.S. central banker said on Thursday, citing improvements in the labor market.

"I don't want us to be behind the curve in beginning to normalize interest rates," Kansas City Federal Reserve Bank President Esther George told CNBC.

"When you see the economy getting as close as we are to full employment, to stable inflation, it would suggest to me that the time has come to do that."

George, who will not rotate into a voting seat on the Fed's policy-setting committee until 2016, is considered to be one of the Fed officials least tolerant of inflation.

Speaking ahead of the central bank's monetary policy symposium in Jackson Hole, Wyoming, George warned in several televised appearances that the Fed risked moving too slowly.

"I think a very natural response when you get to this point is worrying that you might derail the recovery," she told Fox Business Network. "But then again we've seen data come in stronger than we expected."

"I think when you look on the whole, thinking about the progress you've made, and then acting, avoids getting behind the curve, because we know from history that brings its own set of consequences," she said.

The U.S. central bank was on track to shutter a bond-buying stimulus program in October, but said it was appropriate to wait a "considerable time" after that before hiking benchmark rates, which it has held near zero since December 2008.

Asked on Bloomberg television how she would know the time was right, George said: "I think we're getting close to that."

"Some of the policy benchmarks that we looked at and have been looking at for some time are already signaling that we should be above zero interest rates."

(Reporting by Jason Lange and Anna Yukhananov in Washington, and Sam Forgione in New York; Editing by Bill Trott and Bernadette Baum)

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