Inflation key to Fed rate hike

The timing of any rise in US interest rates will depend to a large extent on the outlook for inflation, which currently remains below target, meaning a hike may not come until next year or even 2016, Chicago Fed President Charles Evans said on Monday.

But there are signs that inflation is starting to tick up. Prices rose 0.2 percent in April, pushing the year-on-year reading up to 1.6 percent, the largest gain since November 2012.

Evans said the Fed's 2 percent inflation target should not be seen as a ceiling and could be higher.

He forecast US economic growth of around 3 percent per quarter for the rest of this year, possibly a little higher in the current quarter, and said the inventory adjustments that hit first quarter growth would not be a negative factor.

The Fed was expected to complete the tapering of its stimulus plan by the end of this year, he said.