U.S. Federal Reserve officials who are most anxious to hike interest rates said Friday that continued turmoil in financial markets may cause the central bank to delay tightening monetary policy beyond next month, even though the U.S. economy remains strong.

    St. Louis Fed President James Bullard told Reuters he still favored hiking rates at the Fed’s next policy-setting meeting in mid-September, though he added that his colleagues would be hesitant to do so if global markets were volatile at that time.

    Loretta Mester, head of the Cleveland Fed and another so-called hawk who sometimes runs against the grain at the central bank, said the U.S. economy still could handle a modest rate hike, though she did not commit to backing a move at the Sept. 16-17 meeting.

    Their comments suggest the next three weeks will be critical as Fed policymakers weigh whether concerns about a slowing Chinese economy, the rising dollar, and falling commodity prices pose too deep a threat to U.S. inflation and economic growth for them to raise rates for the first time in nearly a decade.

    The Fed’s policy-setting Federal Open Market Committee (FOMC) “does not like to move right in the middle of a global financial storm,” Bullard said in an interview on the sidelines of a global central bankers’ conference.

    “So one of the advantages we have is that this storm is occurring now and, at least as of now, we think it will be settled down by the time we actually got to the FOMC meeting,” he added. “If markets are extremely volatile right in the run-up to a meeting, everyone said the same thing — why don’t we wait for this thing to settle down, see where it shakes out, and once we see that we’ll make a decision.”

    (SD-Agencies)