Not likely enough new data for Q1 rate hike -Fed's Lockhart

(Recasts with comments on rate hike timing)

ATLANTA (BSE: ATLANTA.BO - news) , Jan 11 (Reuters) - There may not be enough fresh data on inflation to support a second U.S (Other OTC: UBGXF - news) . interest rate increase in January or March, Atlanta Federal Reserve Bank President Dennis Lockhart said on Monday in comments that help give shape to the Fed's possible rate path.

"How much will we know about inflation trends or inflation developments going into the mid-March meeting? We will have some data but not a great deal more," Lockhart told reporters after a speech in Atlanta.

With (Other OTC: WWTH - news) the United States approaching full employment, progress on the central bank's 2 percent inflation goal is now key to the debate over how fast to raise rates, with Lockhart saying he will look for "hard evidence" that the annual inflation rate is moving toward that target.

The Fed raised rates for the first time in a decade at its December policy meeting, refocusing debate on when it will take a second step in what it has described as a "gradual" tightening of policy.

Investors currently are split over whether the second rate hike will take place in March or April (LSE: 0N69.L - news) , according to an analysis of fed funds futures contracts compiled by the CME Group (Kuala Lumpur: 7018.KL - news) .

In remarks to the Rotary Club of Atlanta, Lockhart said he felt that international problems such as the slowdown in China and continued low oil prices are now the chief risks to what is an otherwise promising outlook for the U.S. economy.

Lockhart said he remains "mildly optimistic" that strong domestic consumption will help spur U.S. GDP growth of as much as 2.5 percent this year, enough to push the economy to full employment and eventually boost inflation.

He said he does not expect the latest round of international volatility to impact the U.S. recovery, as long as it is not sustained. But prolonged uncertainty around China's fate, for example, could eventually take a toll.

"The downside risks relate mostly to the influence of the rest of the world on our economy," said Lockhart, who does not vote on the Fed's policy-setting committee this year but participates in its deliberations as a regional bank president.

The Fed is scheduled to hold eight policy meetings over the year, with the first one set for later this month. It (Other OTC: ITGL - news) raised rates at its last meeting, ending a seven-year stretch in which rates were held at a near-zero level in response to the 2007-2009 financial crisis and recession. (Reporting by Howard Schneider; Editing by Paul Simao)