By Jonathan Spicer and Leah Schnurr
NEW YORK (Reuters) - The Consumer Price Index data for March was "in line with low underlying inflation," a top U.S. Federal Reserve official said on Friday, adding it is too early to determine whether commodity price spikes are playing a role.
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Chicago Federal Reserve Bank President Charles Evans, a voter on the Fed's policy-setting committee, said strong monetary accommodation remains necessary as the U.S. economy improves, and it's unlikely he will push for tighter policy this year.
The core CPI rose 1.2 percent year over year, and data earlier on Friday showed underlying prices in March remained contained. The mild rise could be taken as vindication for central bank officials who have viewed the recent energy price spike as having a temporary effect on inflation.
"As long as core inflation year over year is 1.5 percent or lower, I'd be surprised if I'm advocating a tightening in policy" in 2011, Evans told reporters on the sidelines of the annual Hyman P. Minsky conference here.
"At the moment I think that what's going on with food, energy and commodity prices is a relative price adjustment due to stronger global demand around the world, and some one-off supply effects..." he added.
"Those are one-off or transitory effects and it's much too early to say that they've got embedded in underlying inflation."
After the 2008 financial crisis, the Fed undertook unprecedented emergency lending measures to rescue the U.S. economy from its worst slump in decades, cutting short-term rates to near zero in late 2008 and buying nearly $2 trillion in bonds.
Though the economic recovery is gathering steam, rising commodity prices are stirring up anxiety about inflation around the world and throwing into question how and when the Fed will begin to tighten monetary policy.
Recent comments by Fed officials suggest pressure is building from within to tighten financial conditions, though inflation remains below the Fed's 2.0-percent target and employment remains high at 8.8 percent.
The Fed appears intent on completing its latest, $600 billion "quantitative easing" program, known as QE2.
"I now am more comfortable with the idea that $600 billion is a good sized program, and it could well be the case that that program will end in June as we originally announced," said Evans, whose views are usually in line with Fed Chairman Ben Bernanke and other core members of the policy-setting meeting.
Inflation is not yet at a "tipping point," he said.
"At the moment inflation is still low ... and the unemployment rate continues to be quite high, so it's difficult for me to see strong underlying inflation pressures from what we've seen so far," Evans said.
Earlier at the conference, Evans warned that monetary policy alone cannot ensure economic and financial stability in the United States, which is recovering from its worst economic crisis in decades.
(Reporting by Jonathan Spicer and Leah Schnurr)