Hoenig suggests raising target interest rate to 1 percent

The FOMC needs greater flexibility to gradually change the rate as the economy improves, he said. 

Hoenig expects the economy to expand at about a 3 percent rate this year, revised slightly downward from his “above 3 percent” forecast. 

Gross domestic product expanded at a revised downward rate of 2.7 percent in the first three months of the year. Economists have expressed concerns that growth could be stunted by a slowly expanding job market. 

Hoenig also addressed the Fed’s balance sheet, saying the central bank needs to move “as quickly as we can” to sell off more than $2 trillion in mortgage-backed securities acquired to help promote economic growth during the financial crisis.