Fed's Lockhart: Two rate hikes this year 'certainly possible', flags Brexit risk

By Lindsay Dunsmuir

AMELIA ISLAND, Fla. (Reuters) - The United States could see two further interest rate rises this year but uncertainties abound including the impact on the U.S. economy should Britain vote to leave the European Union, Atlanta Fed President Dennis Lockhart said on Tuesday.

"Two rate hikes are certainly possible. We have enough (Fed policy) meetings remaining but it depends entirely on how the economy evolves," Lockhart told reporters in Amelia Island, Florida.

On that front, Lockhart said that incoming data between now and the Fed's next meeting on June 14-15 "is not comprehensive by any stretch of the imagination" and that the upcoming Brexit vote in Britain raised risks.

"It is the repercussions for the U.S. economy that would concern me...it's really a question of indications in financial markets of a reaction to rising uncertainty and the degree of volatility we are seeing again in financial markets," he said.

The U.S. central bank kept interest rates unchanged last week and showed little sign of urgency in raising rates again.

That has dampened investor bets on the Fed raising rates at its next meeting. Investors currently predict the Fed will raise its benchmark interest rate only once this year, and see only a 13 percent probability of a hike in June, according to an analysis of fed fund futures by the CME Group.

While Lockhart said markets should put more probability on June being "a real option", he did little to signal that he felt the economy would be sufficiently settled for a June increase.

He added it was still too early to assess whether there would be sustained firming of inflation and that he was looking for evidence that the United States is on track for 2 percent gross domestic product growth this year.

Fed policymakers in March forecast two rate rises this year and are monitoring to see if inflation is firming towards the Fed's two-percent target and the U.S. economy can prove resilient amid an uncertain global economy.

Last week, data showed tepid U.S. first-quarter gross domestic product growth and a softening in the Fed's preferred measure of inflation to a rate of 1.6 percent in the 12 months through March, from 1.7 percent in February.

(Reporting by Lindsay Dunsmuir; Editing by Chizu Nomiyama)

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