PALM BEACH, Fla. -- Philadelphia Federal Reserve Bank President Charles Plosser said Friday he expected the Treasury yield curve to be flatter than in previous times due to more stable inflation expectations.

"I anticipate that the yield curve is likely to be flatter, on average, than at comparable points in past business cycles," he told a bankers conference. "This is not to say that the yield curve is going to be inverted all the time, but, on average, I believe the curve will be flatter."

The yield curve has been inverted, meaning that yields on longer-term Treasuries were lower than those at the short end, for the past seven months.

The curve normalized after the most recent Fed policy decision on Wednesday, when it left benchmark short-term U.S. interest rates unchanged but dropped a reference to the possibility of further rate hikes.

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Plosser cited two premises for a flatter yield curve: firstly, inflation and inflation expectations are likely to be lower and more stable, and secondly, inflation and the real economy are likely to be less volatile.

Even if the real economy showed more signs of volatility, the Fed would aim to keep inflation down.

"I would note that even if volatility in the real economy returns to a higher level, the Federal Reserve is not likely to let the volatility in inflation rise, so that source of risk, I believe, will stay lower," he said.

Plosser did not comment on recent Fed policy in his remarks.

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