Richmond Fed President Jeffrey Lacker said in a speech on Wednesday that interest rate hikes are still possible this year. He noted that the Fed's federal-funds rate, adjusted for inflation, was below the natural rate.

"In fact, this perspective would bolster the case for raising the federal funds rate target," Lacker said.

He pointed out that the monetary policy's effect on real economic activity was limited and temporary.

Lacker is not a voting member of the Federal Open Market Committee (FOMC) this year.