By Howard Schneider
JACKSON HOLE Wyo. (Reuters) - The U.S. Federal Reserve is focused on an initial interest rate hike between the first quarter and the middle of next year, with possible changes in its main policy statement as soon as next month, Atlanta Fed President Dennis Lockhart said on Saturday.
"It is reasonable with the improving data to begin to anticipate a change in the basic interest rate policy and, therefore, it is quite a reasonable debate as to whether that ought to be early 2015 or mid-2015 or even later," Lockhart told Reuters in an interview here. "The debate is real."
Lockhart said he continues to forecast a rate increase in mid-2015, with economic growth hovering around 3 percent, and that he feels it is "still early" to change the central bank’s main policy statement.
That statement says a rate increase won’t be appropriate until a "considerable time" after the central bank's bond purchases end this fall, and that there is still "significant underutilization" of labor.
"Even with good data, and we have had a run of very good data on balance, you still can only draw tentative conclusions," said Lockhart, who does not presently have a vote on the Fed's main policy committee.
He added that he did not expect progress towards the Fed’s dual goals of 2 percent inflation and maximum employment to be "electrically fast."
"It is going to be gradual,” he said, speaking on the sidelines of the Fed's annual central banking conference.
Still, with economic growth continuing, "some shift of language is on the table, should be on the table in the coming meetings," said Lockhart, who is viewed as a centrist on monetary policy.
His comments add an important voice to a debate within the Fed that has congealed around two poles – those who feel the fast drop in the unemployment rate means the economy is tightening and that rates should rise soon, and those, including Fed Chair Janet Yellen, who say a broader set of statistics show that labor markets remain weak.
Lockhart said he regards himself as a "U-6er" - meaning he watches the broader definition of unemployment, labeled U6 by the Bureau of Labor Statistics, that includes things like people working part-time for economic reasons.
The formal unemployment rate is U3, which only measures people who don't have a job but are actively looking for one.
Though the Fed debate has sharpened, there is no sense yet that the center is shifting towards a faster or earlier-than-expected rate increase. "I am one who prefers we let a little more time pass in order to have the evidence accumulate that we are on a solid track and we are likely to stay on that track," Lockhart said.
(Reporting by Howard Schneider; Editing by Paul Simao)