The Federal Reserve is probably not yet finished raising interest rates, but must monitor price gains to prevent an "unacceptable rise" in inflation, a top central bank official said on Friday.
Janet Yellen, President of the San Francisco Fed, also said that a change in the Fed's post-meeting statement will eventually be required to reflect recent changes in policy.
"While it seems unlikely that the end of the current tightening phase is yet at hand, there obviously will come a time when these two phrases are no longer appropriate," Yellen said in prepared remarks delivered to the California Chamber of Commerce in San Francisco.
The official also sounded optimistic about the nation's economic prospects, saying consumer spending and industrial activity had remained resilient to shocks from higher energy costs and Gulf Coast hurricanes.
She said reconstruction in the hurricane-affected areas could extend a recent growth spurt in the U.S. economy into the first half of 2006.