Fed's Lockhart says rate hike path may be "slow" and "halting"

(Adds Lockhart remarks on inflation, rate hikes)

ATLANTA (BSE: ATLANTA.BO - news) , Nov 19 (Reuters) - The U.S (Other OTC: UBGXF - news) . Federal Reserve may be heading for a "slow ... halting" effort to raise interest rates after it begins its first tightening cycle in about a decade, Atlanta Fed President Dennis Lockhart said on Thursday.

Speaking less than a month before the U.S. central bank is widely expected to raise rates from the current near-zero level, Lockhart said he is "comfortable with moving off zero soon," barring an unexpected downturn in the economic outlook.

But he said the Fed should be cautious as it ponders how fast to continue raising rates after an initial hike.

"The pace of increases may be somewhat slow and possibly more halting than historic episodes of rising rates," Lockhart said in a speech to the DeKalb Chamber of Commerce in Atlanta.

"Moreover, to the extent the evolving economic picture allows a process leading to a 'resting place,' that point might be lower than in the past, as implied by a somewhat lower trend rate of economic growth."

Although the Fed's targets for the U.S. labor market have largely been met and its price goals should be met over time, Lockhart said that didn't mean the economy is in the clear, or it will function as it did before the 2007-2009 financial crisis.

There are "serious concerns" about the global outlook, he said, and lower trend U.S. economic growth may mean the Fed's target "equilibrium" interest rate may be lower than in the past.

The Fed also will have to confront how it judges progress towards its 2 percent medium-term inflation target and whether it waits for clear evidence of a rise in prices or tries to act in advance of one, Lockhart said.

The Fed's current policy stance is that an initial rate hike would be appropriate as long as there is "reasonable confidence" inflation will rise toward its medium-term target. Its rate-setting committee will next meet on Dec. 15-16.

U.S. rates futures on Thursday implied traders see a 72 percent chance the Fed will hike rates at that meeting, compared to a 68 percent chance on Wednesday, according to CME Group (Kuala Lumpur: 7018.KL - news) 's FedWatch.

But with debate about the impact of low global growth and other factors underway, Lockhart said a new standard may be appropriate to judge the pace of further rate increases.

"The 'reasonable confidence' criteria was set up for the decision to 'liftoff,' and once we are beyond that point ... we will have to think about our communications in tracking or monitoring inflation," he told reporters after his speech. (Reporting by Howard Schneider; Editing by Paul Simao)