Senior U.S. Federal Reserve officials said on Thursday inflation is not an immediate threat as a weak economic recovery and a grim outlook for jobs keep price pressures in check.

Charles Plosser, head of the Federal Reserve Bank of Philadelphia and Richard Fisher, his counterpart at the Dallas Fed, said the U.S. recovery was underway but noted risks to growth remain.

“The gears are starting to click but very, very slowly,” Fisher told reporters after a speech at the CATO Institute. “The economy is still quite flaccid.”

The U.S. central bank slashed interest rates to near zero last December and has kept them there since to foster recovery from the deepest recession since the 1930s.

After their last meeting on November 3-4, Fed policymakers reiterated a pledge to keep rates extraordinarily low for an extended period.

Plosser, one of the Fed’s biggest anti-inflation hawks, said after a speech in Singapore the ailing commercial real estate market remains a problem as falling prices threaten small and medium-sized U.S. banks.

While inflation is not a threat for now, the United States will have to look very hard at reversing course on rates as the economy strengthens, he said.

Plosser later told CNBC he was growing more confident a U.S. economic recovery was building, and less concerned about the risk of a double-dip recession, but it was not quite time to raise rates.

Fisher and Plosser are not currently voters on the Fed’s policy-setting Federal Open Market Committee and will not rotate into voting slots until 2011.

Their colleague James Bullard, president of the St. Louis Fed, was also pessimistic about prospects for U.S. employment.

Bullard told Reuters on the sidelines of a meeting in Paris he was “losing faith” in there being an increase in jobs by the end of 2009. He expected to see some net hiring in the first part of 2010. The U.S. economy lost 190,000 jobs in October, sending unemployment to 10.2 percent, a 26-1/2 year high.

The sanguine nature of the central bankers’ views on inflation reaffirmed investor expectations near-term rate hikes are not in the cards. Hard money training

Tags: economic recovery, fed, Federal Reserve, inflation, us recovery, weak economy

This entry was posted on Thursday, November 19th, 2009 at 9:09 pm and is filed under Debt, Economic Turmoil, Global Economy, Global Financial, Global Recession, US Deficit, US Finance, US Inflation, World Financial. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.