Gradual US rate hikes appropriate: Mester

The president of the US Federal Reserve Bank of Philadelphia is comfortable the US central bank isn't behind the curve on interest rates.

A US Federal Reserve president says gradually lifting interest rates would be appropriate for the US economy.

US Federal Reserve Bank of Philadelphia president Loretta Mester, who is also a member of the Federal Open Market Committee that sets interest rates in the US, told an audience in Sydney she's comfortable with her country's current settings.

"I'm comfortable that we're not behind the curve, but I do think that a gradual upward tilt to interest rates is appropriate for the US economy. The timing of course of when the next step would be or the actual slope of that path is going to depend on how the economy evolves," she told the Sydney Banking and Financial Stability Conference on Tuesday.