By Michael S. Derby and Shayndi Raice

Several Federal Reserve officials, in their first public comments since raising short-term interest rates last month, signaled Friday they still favor lifting them higher this year.

The Fed in December lifted its benchmark federal-funds rate to a range between 0.50% and 0.75% and penciled in three quarter-percentage-point increases in 2017. Two of the central-bank speakers Friday suggested that more than three moves could be coming.

Cleveland Fed President Loretta Mester said in a Wall Street Journal interview she has a steeper forecast for rate rises because she is expecting faster economic growth and higher inflation than many of her colleagues.

The Richmond Fed's Jeffrey Lacker didn't lay out how far he wants to go with rates, but said they "may need to increase more briskly than markets appear to expect, depending on developments as the year unfolds." Mr. Lacker, a Fed "hawk" who for years has favored higher rates than most of his Fed colleagues, said "almost all benchmarks recommend higher interest rates, in most cases substantially higher rates."

Chicago Fed President Charles Evans, among the central-bank "doves" who tend to support holding rates low to support growth, said at an academic conference that "two moves is not an unreasonable expectation for the year" and three increases is a possibility.

Dallas Fed President Robert Kaplan supported raising rates, but didn't indicate how much he would like to move them. "A higher fed-funds rate will be more appropriate," he said in a Bloomberg TV interview. "I still think we can do it in a gradual and patient way," he said, adding he would like to keep rates low enough to keep stimulating the economy for a while longer.

The policy makers spoke after the Labor Department's release early Friday of its December employment report, which showed modest job gains, firming wage growth and 4.7% unemployment.

Ms. Mester said it was a "decent" report and "about in line with expectations."

The Fed's forecasts released last month showed officials expected continued moderate economic growth this year, a decline in the unemployment rate to 4.5% by year's end, and a slow rise in inflation back to their 2% target by the end of 2018.

Minutes of their December meeting showed officials were uncertain how President-elect Donald Trump's policies would affect the economy. About half of the 17 officials had based their forecasts on expectations of tax and spending policies that would spur growth. Officials, however, "agreed that it was too early to know what changes in these policies would be implemented and how such changes might alter the economic outlook," the minutes said.

Mr. Kaplan said Friday the prospect of more expansionary fiscal policies creates more risk that the economy could perform better than he currently projects, but it is still unclear what elected leaders will do.

The officials' remarks mark the leading edge of a wave of Fed appearances scheduled over the coming two weeks.

Mr. Evans and Mr. Kaplan are voting members of the central bank's rate-setting committee this year. Mr. Lacker and Ms. Mester aren't voters this year, due to the central bank's annual rotation system, but they will participate at the group's policy meetings.

The committee's next meeting is Jan. 31-Feb. 1. Analysts and investors don't expect the Fed to raise rates then, so soon after its December move.

Write to Michael S. Derby at and Shayndi Raice at

(END) Dow Jones Newswires

January 06, 201718:42 ET (23:42 GMT)

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