A weak global economy and a gloomy forecast could delay the U.S. Federal Reserve's decision to raise interest rates, according to Fed vice president Stanley Fischer.
At an event sponsored by the international Monetary Fund (IMF) Saturday, Fischer said:
"If foreign growth is weaker than anticipated, the consequences for the U.S. economy could lead the Fed to remove accommodation more slowly than otherwise. Tightening should occur only against the backdrop of a strengthening U.S. economy and in an environment of improved household and business confidence."
Recently, the IMF - in its latest World Economic Outlook - cut the global growth forecast to 3.3 percent for this year and 3.8 percent for 2015 on account of a depressed euro market. In July, the group had forecast a 3.4 percent and 4 percent growth respectively.
Fischer added that the Fed could not ignore developments outside of its geographical boundaries especially because the dollar was a primary international currency, MarketWatch reports.
Fischer's comments come at the heels of the Federal Reserve's minutes earlier in September when it said it would not raise interest rates for a "considerable" period of time even if its bond-buying scheme (that helped keep short-term borrowing rates near zero) came to an end.
The fed said that though labor condition improved, unemployment and wages still had to show growth for them to start raising interest rates.
But at Saturday's event in Washington D.C., Fischer said that the time to raise rates has arrived.
"The normalization of our policy should prove manageable. We have done everything we can, within the limits of forecast uncertainty, to prepare market participants for what lies ahead."
"In determining the pace at which our monetary accommodation is removed, we will, as always, be paying close attention to the path of the rest of the global economy and its significant consequences for U.S. economic prospects," Fischer said adding that a potential rate-rise could come in the middle of next year, according to Reuters.
Fischer was not the only Fed official to comment on interest rate hikes this week. Speaking at a separate event in Las Vegas, John Williams - president of the San Francisco Federal Reserve - also said that rates could witness a hike in mid-2015.
"If the economy or inflation heat up faster than I expect, we should lift rates sooner," Williams was quoted by Fortune.
