The Federal Reserve could potentially hike interest rates as early as September, New York Fed President William Dudley said Tuesday.
"We are edging closer towards the point in time when it will be appropriate to raise rates further," he said during an interview on the Fox Business Network.
"I think it is possible" that the target for overnight interest rates will be raised at the next gathering of the central bank's policy-setting Federal Open Market Committee on Sept. 20 and 21, he said.
Dudley, a permanent voting member on the committee and a close ally of Fed Chair Janet Yellen, pointed to the improving trends he is seeing in the U.S. economy, including a "tightening" labor market.
U.S. employers added 255,000 jobs in July, a substantial improvement following May's data, which showed just 11,000 new jobs.
He also noted inflation is moving closer to where the Fed wants it to be, saying the United States seems to be on track for 2 percent inflation.
Asked if he is concerned about financial bubbles brewing, he said: "I don't see anything now that is particularly disturbing. I would argue the one area which looks a little bit stretched to me is the bond market."
Dudley noted the massive quantitative easing efforts coming from the Bank of Japan, the European Central Bank and the Bank of England as factors driving up the price of U.S. bonds.