NEW YORK (CNNMoney) — The Federal Reserve could be hitting the brakes on a rate hike in September.

After fears that China's economic slowdown has worsened and global stock markets have nosedived, a rate hike appears "less compelling," said New York Fed President William Dudley on Wednesday.

The Fed hasn't increased its benchmark interest rate in nearly a decade. A rate hike would be considered a signal that the U.S. economy is healthy and is on its way to recovery from the recession.

But China's slowdown is weighing on economies across the world.

It's limiting growth in many countries and has led to turmoil in global stock markets and sent currencies plunging. It all could eventually curb economic growth in the U.S., which is what concerns the Fed.

Related:

Fed watch: Inflation is non-existent, worrying some

The U.S. economic recovery is sorely missing a healthy rate of inflation. The Federal Reserve is expected to raise its key interest rate in 4 weeks for the first time in almost a decade. The move would signal that the U.S. central bank sees the economy getting close to full health.

Speaking at the NY Fed Wednesday, Dudley did not clarify if he was looking to future Fed meetings in October through December to raise rates for the first time, often called "liftoff." He only indicated that a September rate hike appeared less likely in his view.

All eyes will turn to Jackson Hole, Wyoming, Thursday through Saturday as some Fed policy makers, including Vice President Stanley Fischer, hold an annual meeting. Fischer is considered to be one of the Fed committee members most inclined to a rate hike.

However, Dudley's comments dampen the prospects of the long awaited rate hike in September.

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