The US Fed is raising expectations of an interest rate increase this year. That's because two policymakers said Tuesday that the economic stars now appear to be aligning despite weak U.S. economic growth in the first half of 2016.

New York Fed President William Dudley said a rate increase is possible at the Fed's September 20-21 policy meeting. Dudley cited as motivators evidence of wage gains and a tighter labor market that could boost inflation.

Meanwhile, Dennis Lockhart of the Atlanta Fed said an increase next month is in play.