More Federal Reserve interest rate increases are "appropriate" at this time to hold down inflation, Chicago Fed President Michael Moskow said on Tuesday.
Long-run inflation expectations remain contained for now but the central bank would consider a "stronger policy response" to prevent expectations of higher inflation from developing, Moskow said in remarks prepared for a speech to the Chicagoland Chamber of Commerce business leaders' breakfast.
Core inflation "is at the upper end of the range that I feel is consistent with price stability," said Moskow, a voting member of the Federal Open Market Committee this year.
Moskow said much of the slack in the U.S. economy has been eliminated, with the October jobless rate of 5 percent "roughly consistent with an economy operating at potential."
A possible peak in the housing market poses a risk but the impact on overall consumer spending if home prices fell would likely be modest, Moskow said. "These gradual aggregate changes would allow time for any appropriate recalibration of policy — if, in fact, one is needed," he said.