Fed officials say threat of inflation remains

WASHINGTON -- Inflation in the United States may be under control; the risk that it will accelerate isn't, according to three central bankers.

Falling unemployment and busier factories may produce bottlenecks in the economy that threaten to push prices higher, Federal Reserve governor Susan Bies said Wednesday. Richmond Fed president Jeffrey Lacker, speaking the same day, said it's ''too soon" to dismiss the risk from soaring energy prices. The Fed must ''keep energy price increases from causing a general run-up of inflation," Atlanta Fed president Jack Guynn said in a speech yesterday.

Investors and economists are watching Fed speeches to gauge how many more times the central bank may raise its main interest rate. Guynn, Bies, and Lacker vote this year on rate decisions by the Federal Open Market Committee, which next meets Jan. 31. Their concerns about inflation suggest rates have further to rise.

''They like inflation where it is now," said David Wyss, chief economist at Standard & Poor's in New York. ''But they're worried that it's creeping up."

A government report Wednesday showed inflation, excluding food and energy costs, isn't climbing yet. The Labor Department's ''core" price index rose 2.2 percent last year, matching the gain in 2004 and the average for the last decade.

Energy prices will probably keep exerting pressure on inflation, Guynn said in a speech to the Exchange Club in Augusta, Ga.

''The good news is that core inflation measures have not moved noticeably higher in recent months," and inflation expectations ''should remain anchored," Guynn said.

Bies, who spoke Wednesday at a technology forum in Bethesda, Md., still sees risks. ''Tight resource utilization is likely to put pressure on prices," said Bies, 58, referring to factories running closer to capacity and the possibility of worker shortages.

Lacker, 50, told an audience at Towson University in Maryland that ''monetary policy should respond to energy shocks by remaining focused on price stability."

''It is too soon to declare that 'pass-through risk' is entirely behind us," said Lacker, a former research director at the Richmond Fed.