Inflation holds the key to Fed's 'lift-off'

Washington

FEDERAL Reserve officials planning to lift interest rates as soon as September have been encouraged by solid US jobs growth, but inflation holds the key to how far the Fed can go in moving rates away from zero.

Fed officials have said that they do not need to see prices accelerate to start raising rates after six years near zero, and "lift-off" appears nearly ordained by a 5.3 per cent unemployment rate, the lowest since April of 2008.