“I remain predisposed to September being a possible date for liftoff,” he said. “At the same time, in the greater scheme of things, I don’t think (waiting) a meeting or two is going to be decisive for the U.S. economy.”

The economy’s progress since the start of the year has been “quite encouraging,” Mr. Lockhart said in the speech. He said he has more confidence in the economy’s resilience compared with just a few months ago, and is “much less concerned” about a reversal of economic fortune.

“A large part of the current inflation is temporary,” Fischer said in an interview Monday with Tom Keene on Bloomberg Television. After the effects of cheaper oil and other raw materials dissipate, “these things will stabilize at some point, so we’re not going to be as low as we are forever.”

Fischer’s remarks indicate that while he’s pleased with progress on employment, he may be waiting for signs inflation will start moving up toward the central bank’s target. The Federal Open Market Committee meets Sept. 16-17 for a gathering at which many investors and economists expect it will raise interest rates for the first time in almost 10 years.

“Employment has been rising pretty fast relative to previous performance, and yet inflation is very low,” he said. “And the concern about this situation is not to move before we see inflation, as well as employment, returning to more normal levels.”

Federal Reserve Governor Jerome Powell said that while the “time is coming” to raise interest rates, he’s waiting to see how economic data bear out before deciding whether to support such a move next month.

“Fortunately, I don’t have to figure it out now,” Powell said Wednesday in a CNBC interview. “I’m going to be very, very focused on the data.”

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“The time is coming. I think most members of the FOMC at the June meeting believed that it was time to raise interest rates sometime this year,” Powell said. “When we do that, there will be -- if the economy continues to grow -- there will be a process of raising rates, gradually, over time.”

I would say the inflation picture will be hard to read in the coming weeks, perhaps months. Therefore the conclusion that I will have to draw—and any individual participant on the [Federal Open Market Committee] will have to draw—in terms of being reasonably confident that inflation will converge in the medium term back to target, is going to be more of a composite of indirect evidence or indirect indicators than being satisfied with the direct evidence on inflation.

Having said that, one of the ways I go about evaluating inflation—I obviously like everyone else look at the 12-month number. Then I look at the near-term, shorter-horizon numbers. The three-month number gives me more of a sense of a run rate, the six month number has some of those benefits as well. Some of the shorter-horizon inflation numbers in the [personal consumption expenditures[ price index seem to be firming relative to the longer horizon. I take some courage from that.

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My own approach to that is to say is I think we have to put significant weight on the accumulated progress we have seen quite literally over a number of years, but certainly since the first of the year, and not be overly influenced by the gyrations that so often occur in month-to-month data. That is not to say that you ignore the evidence that is most proximate to the date of having to make a decision, but I won’t be overly influenced by just the latest thing I’ve heard on the economy. I do think this is a time to try to take a pretty broad perspective, a pretty long horizon perspective to where the economy is relative to where it was and whether a policy rate at zero continues to be appropriate for the circumstances.

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I want to sort of hold off on {the specific question of whether liftoff will come in September}. I have said publicly before that I lean toward September and I am still very open to a September move.

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One framework that I will be using will be looking for any indication in the economic data that undermines my basic belief about the track of the economy... I will be looking closely at all evidence that we see in the data for indications that my basic assumptions are wrong or should be doubted... That is going to be one of the principal ways I will go about judging the question of whether liftoff in September is appropriate or not. To interpret that, that means I think there is a high bar right now to not acting, speaking for myself. It will take a significant deterioration in the economic picture for me to be disinclined to move ahead.

“We are good position to make the first normalization move,” Mr. Bullard said. “My sense is that a 25 basis-point move would essentially be a nonevent in financial markets,” he said, referring to the likely 0.25% increase the first move is expected to be.

Mr. Bullard doesn't currently vote on the FOMC, but he is an influential voice on monetary policy matters. In recent comments ahead of the interview, he had expressed support for raising rates this year and had nodded toward September. He said he would have voted for Wednesday’s holding action. “I would have supported the committee’s decision to wait and get more data and make a decision at the September meeting.”

There’s a more than 50-50 chance the Federal Reserve will raise interest rates in September, St. Louis Fed President James Bullard said.

“The economy is much closer to normal today than it’s been in quite a while, certainly over the last five years,” Bullard said Monday in an interview on Fox Business Network. “The main problem is we are in emergency settings for monetary policy.”

While financial market participants are particularly focused on the timing of the first rate increase, when it comes to monetary policy, timing isn’t everything. The FOMC meets eight times a year, and the difference in lifting off from a zero interest rate a meeting or two earlier or later is not significant. More important for macroeconomic performance is the expected path of policy beyond liftoff because expectations about the future path of policy can affect today’s economic decisions. According to the FOMC’s current assessment, even after the first rate increase, monetary policy is expected to remain very accommodative for some time to come, with rates expected to move up only gradually to more normal levels and with the decisions about that path depending on incoming information on the economy’s performance. One benefit of the gradual approach is that it will allow us to recalibrate policy over time as some of the uncertainties surrounding the underlying economy in the post-crisis world, like the potential growth rate, are resolved.

If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate target, thereby beginning to normalize the stance of monetary policy. Indeed, most participants in June projected that an increase in the federal funds target range would likely become appropriate before year-end. But let me emphasize again that these are projections based on the anticipated path of the economy, not statements of intent to raise rates at any particular time.

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If we wait longer, it certainly could mean that when begin to raise rates, we might have to do so more rapidly, so an advantage to beginning a little bit earlier is we might have a more gradual path of rate increases. As I indicated, the entire path of rate increases does matter.

“I still believe this will be the year for liftoff, and I still believe that waiting too long to raise rates poses its own risks,” Mr. Williams said.

“I can’t tell you the date of liftoff,” Mr. Williams said in reference to when Fed officials might boost rates off of their current near-zero levels. That said, “I see growth on a solid trajectory, full employment just in front of us, wages on the rise, and inflation gradually moving back up to meet our goal” of a 2% rise, he said.

Williams said that the September meeting “would be a very plausible time” to start raising interest rates.

“A 25-basis-point increase in the fed-funds rate should not have an adverse effect on the economy” given the growth that has happened, and is likely to happen in the future, Ms. George said. She explained that while inflation has been short of the Fed’s 2% price target it has been weak largely on temporary factors related to oil and the strength of the dollar.

Ms. George said Fed officials have to be forward looking and start moving rates higher before inflation takes off, because price dynamics can change quickly and force a more aggressive and potentially disruptive response from policy makers.

“You have to have some dose of courage” in your forecast and be willing to act, even when the future is uncertain, Ms. George said.

My own outlook for the economy and inflation is broadly consistent with the central tendency of the projections submitted by FOMC participants at the time of our June meeting. Based on my outlook, I expect that it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy. … Because there are some factors, which I mentioned earlier, that continue to restrain the economic expansion, I currently anticipate that the appropriate pace of normalization will be gradual, and that monetary policy will need to be highly supportive of economic activity for quite some time. The projections of most of my FOMC colleagues indicate that they have similar expectations for the likely path of the federal funds rate.

Were the U.S. economy to unfold as I and other policymakers expected in our June SEP forecasts, beginning the policy normalization process later this year might be appropriate. However, the assumption that our current forecasts for labor markets and for inflation will unfold as expected is still subject to considerable uncertainty... …[A]s we near our dual mandate goals, monetary policymaking needs to be particularly data dependent. As I have emphasized today, data dependence at this point means, in my view, that we wait for data that gives us greater confidence in our forecast, especially our forecast for inflation. And it also means we wait to get a better handle on how the crisis in Greece gets resolved, so that we can better gauge its potential to impact financial markets and the domestic economy.

Taken together, the economic data generally point to an economy that is moving in the right direction and has consistently sustained growth over the past five years. This is not to say the economy is issue-free… Unfortunately, although we might wish it so, monetary policy is not the proper tool to address all of these issues. The aggressive monetary actions over the past few years were intended to support economic activity, help labor markets heal and move inflation toward the Fed’s target. I view the considerable progress in labor markets and the relatively steady inflation rate as encouraging. However, keeping interest rates near zero to achieve still further progress toward labor market improvement and higher inflation is risky in my view. In a protracted period of exceptionally low rates, investors seeking out higher returns are willing to take on more risk or seek out more creative financing approaches. When the economy is expanding and rates remain low, adverse events may appear less likely or far into the future, potentially resulting in the mispricing of risk and financial assets. Waiting too long to adjust rates, as we’ve seen in the past, can leave policymakers with few and possibly poor options. … The FOMC has been talking about its exit strategy since 2011. And since March of this year, the Committee has been emphasizing that a decision to raise interest rates would be data dependent. In other words, economic data that confirms further gains in the economy’s performance will drive the timing of the Committee’s actions. So, why hasn’t the FOMC yet raised rates? There are of course different views on the economic data we receive and analyze that lead to legitimate, differing views about what is best for the economy… The continued improvement in the labor market, combined with low and stable inflation, convince me that modestly higher short-term interest rates are appropriate. Current guideposts, or “policy rules,” often used to inform monetary policy decisions also have been signaling that interest rates should be higher. I recognize that a rate increase, however, would be the first one in nearly a decade. So I am not suggesting rates should be normalized quickly or that policy should be tight. Although the economy has improved, economic fundamentals could well mean an accommodative stance of policy is appropriate for some time. I would like to avoid the cost of waiting for more evidence and further postponing liftoff, drawing on a valuable lesson from monetary policy decisions in 2003.

I still believe this will be the year for liftoff, and I still believe that waiting too long to raise rates poses its own risks. I know not everyone agrees and there are those who believe we should wait until we’re nipping at the heels of 2 percent. My reasons for advocating a rise before that happens remain the same. Monetary policy has long and variable lags, as Milton Friedman famously taught us. Specifically, research shows it takes at least a year or two to have its full effect. We’re therefore dealing with my favorite analogy: The car speeding towards a red light. If you don’t ease up on the gas, you’ll have to slam on the brakes, possibly even skidding into the intersection. Waiting until we’re close enough to dance with 2 percent means running the very real risk of having to dramatically raise rates to reverse course, which could destabilize markets and potentially derail the recovery. I see a safer course in starting sooner and proceeding more gradually.