The U.S. economy will be "very weak" for several more months and manage modest growth in 2008, but inflation is a worry and spells for tough monetary policy decisions next year, a top Federal Reserve official said on Wednesday.
"I have to say that I am uncomfortable with the inflation picture, and disappointed that the improvement we saw earlier this year was not more lasting," Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, told the Charlotte Chamber of Commerce.
"I am also troubled by the lengthy divergence we've seen between overall and core inflation," Lacker said.
"Because the job of a central banker is to protect the purchasing power of currency, it is overall inflation that we need to keep down, not just core inflation. ... If energy prices fail to decline, monetary policy decisions will be that much more difficult in 2008," he said.