Case for rate hike clearly strengthened: U.S. Fed official

U.S. Federal Reserve governor Jerome Powell on Tuesday signaled that he is prepared to support an interest rate hike as he saw the case for a rate hike has "clearly strengthened."

"Incoming data show an economy that is growing at a healthy pace, with solid payroll job gains and inflation gradually moving up to 2 percent," said the Fed governor at a forum held by the Economic Club of Indiana.

"The case for an increase in the federal funds rate has clearly strengthened since our previous meeting earlier this month," said the official in his speech.

In its November policy meeting, the Fed left interest rates unchanged amid uncertainty about market reactions to the outcome of the U.S. presidential election. However, the central bank signaled that the central bank could raise rates again as soon as December, because officials saw a pick-up in the U.S. economy and inflation.

Powell said that the U.S. economy is close to the central bank's mandates of maximum employment and 2 percent inflation target. He expected the economy to continue to grow at 2 percent, with strong job gains and a gradual rise of inflation toward the central bank's 2 percent target.

The official warned of the risk of keeping the interest rate low for too long. "Persistently low interest rates can raise financial stability concerns," said Powell, adding that moving rates too slowly could eventually make the Fed to tighten policy abruptly to avoid overshooting the central bank's targets.

The Fed will hold its next policy meeting, also the final of the year, on Dec. 13-14. Investors widely expected the Fed would move the rates at the December meeting. Enditem