Lockhart said he voted with the Federal Open Market Committee majority last week to keep interest rates near zero because he didn’t want to tighten monetary policy in “the teeth of volatility.”

“But at the same time I feel very close to the right time,” to begin tightening, he said Tuesday after a speech in Montgomery, Alabama.

As things settle down, I will be ready for the first policy move on the path to a more normal interest-rate environment. I am confident the much-used phrase "later this year" is still operative.

“I've got a message for your friend Jim Cramer. The Fed cannot permanently raise stock prices. The idea that the Fed is going one way or the other, and this is what's driving the stock market, is not true. He's one of the great people at looking at businesses, how good is this business, what's the profitability of the business, what's this thing worth? And to have him cheerleading for lower rates 24-hours a day is, I think, unsavory.”

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Bullard outlined his case to Cramer. "We're at zero [percent] policy rates and we're at [a] $4.5 trillion balance sheet when the unemployment rate was right on top of the committee's estimate of the natural rate." He also said inflation is showing signs of picking up.

"We have vanquished all our foes. It's time to get off the emergency settings," Bullard added.

The big headline is that the Federal Open Market Committee decided to hold off on raising interest rates this week. It was a close call in my mind, in part reflecting the conflicting signals we’re getting. The U.S. economy continues to strengthen while global developments pose downside risks to fully achieving our goals.

Looking forward, I expect that we’ll reach our maximum employment mandate in the near future and inflation will gradually move back to our 2 percent goal. In that context, it will make sense to gradually move away from the extraordinary stimulus that got us here. We already took a step in that direction when we ended QE3. And given the progress we’ve made and continue to make on our goals, I view the next appropriate step as gradually raising interest rates, most likely starting sometime later this year. Of course, that view is not immutable and will respond to economic developments over time.

I dissented because I believe that an increase in our interest rate target is needed, given current economic conditions and the medium-term outlook. Household spending, which has grown steadily since the recession, has accelerated in the last couple of years. Labor market conditions have steadily improved as well and have tightened considerably this year. With the federal funds rate near zero and inflation running between 1 and 2 percent, real (inflation-adjusted) short-term interest rates are below negative 1 percent. Such exceptionally low real interest rates are unlikely to be appropriate for an economy with persistently strong consumption growth and tightening labor markets.

I was also willing to wait for confirmation that the factors holding down real growth and inflation late last year and early this year were transitory. It is now clear that those factors, which included harsh winter weather, the strengthening dollar, and the steep decline in energy prices, have dissipated. It was not unreasonable to seek more definitive evidence that these impediments to growth and price stability had passed, but that question has now been settled.

There has been a lot of conversation recently about the desirability of initiating a gradual increase in the fed funds rate sometime in 2015. In my view, we should judge the desirability of such a policy decision through the lens of the FOMC’s objectives. Personal consumption expenditures (PCE) inflation has been running well below 2 percent for more than three years and is currently at 0.3 percent. My current outlook is that it will continue to do so for several years. Based on this outlook, raising the fed funds rate in this calendar year would be inappropriate, because such an action would serve to further delay the return of inflation to target.

These considerations refer only to the price stability objective. In terms of the maximum employment objective, I believe that the FOMC can best fulfill this congressional mandate by doing what it can to facilitate further labor market improvement. Again, this consideration argues against raising the fed funds rate in 2015.

Thus, under my current economic outlook, the FOMC can best achieve its objectives by keeping the fed funds rate target at its current level during this calendar year.

In my own view, the normalization process needs to begin and the economy is performing in a way that I think it is prepared to take that.

We are sort of anxious to get going, but given the events of the last several weeks, a risk factor has arisen...

It has to be considered an open question whether we move now or wait a little while.

I’m willing to respect the volatility in markets and see how it shakes out here. But just sitting here today, I’m not seeing how this is going to change the forecast and therefore I think the contours of monetary policy are about the same today as they were a couple weeks ago. But I’m open to looking at data, and we don’t have to make a decision until we get to the meeting, so why not wait until the meeting and see if things settle down here quickly?

I want to take the time I have between now and the September meeting to evaluate all the economic information that’s come in, including recent volatility in markets and the reasons behind that.  But it hasn’t so far changed my basic outlook that the U.S. economy is solid and it could support an increase in interest rates.

The key question for the committee is -- how much would you want to change the outlook based on the volatility that we’ve seen over the last 10 days, and I think the answer to that is going to be: not very much.

You’ve really got the same trajectory that the committee will be looking at that we were looking at before, so why would we change strategy, which was basically to lift off at some point.

The committee does not like to move when there’s volatility. If we had the meeting this week, people would probably say let’s wait.

Note:  Bullard also said he would support scheduling a press conference following the Oct. 27-28 FOMC meeting if the committee doesn’t raise rates next month. That would make it easier for the Fed to explain a liftoff in October.

[A]t this moment the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago. But normalization could become more compelling by the time of the meeting as we get additional information on how the U.S. economy is performing and more information on international and financial market developments, all of which are important in shaping the U.S. economic outlook.

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I'm far away from thinking about quantitative easing... The U.S. economy is performing quite well.

Many observers have called for the FOMC to tighten monetary policy by raising interest rates in the near term. But such a course would create profound economic risks for the U.S. economy.

Why would a near-term tightening of monetary policy be so problematic? Because given the prevailing economic conditions, higher interest rates would push the economy away from the FOMC’s economic goals, not toward them.
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I am confident that the time will come when economic conditions will be appropriate for the FOMC to raise the federal-funds rate from its current low level. But that time is not now. Tightening monetary policy when inflation is projected to be so low is a step in the wrong direction.