Two weeks after the Federal Reserve announced its decision to keep the Federal funds rate unchanged at 5.25 percent for the seventh consecutive meeting and the agency reiterated that inflation was the "predominant” concern, Federal Reserve Bank of Richmond President Jeffrey Lacker said it’s the central bank’s responsibility to curb inflation, and it would be a mistake to rely on a slowing economy to stem price increases.

Speaking at New York University, Lacker, who alone voted to lift interest rates in the last four meetings of 2006, has repeatedly warned of the danger that inflation expectations will drift higher the longer that price gains exceed officials’ comfort zone.

He stated there are "opportunities for the Fed to clarify its intentions,” and he added that the central bank’s position on rates will be "reevaluated” as circumstances change throughout the year.

"It is central banks, not the labor market, that drive inflation down,” Lacker stated. "Clear communications accompanied by consistent actions could bring about a relatively prompt and low-cost reduction in inflation.”

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He told his audience that he was "comfortable” for now that the Fed’s benchmark rate will achieve the bank’s goals. Still, a news source reported, Lacker’s doubt that slower growth will cause inflation to recede clashes with the outlook of other Fed policy makers such as San Francisco Fed President Janet Yellen.

In April, Yellen said she expected that "a modest amount of slack” in the labor market would help bring inflation down. The Fed’s preferred inflation gauge has been at or above the top of the 1 to 2 percent range. According to Lacker, inflation is currently fluctuation around 2.25 percent.

"A reduction in inflation below 2 percent is likely to be temporary and hard to sustain” without a prompt drop in price expectations, said Lacker.

"As long as policy actions appear to be plausibly consistent with movement toward 2 percent inflation, and nothing else acts to alter inflation expectations, that’s likely to be the best forecast of where inflation is headed,” he stated.

Lacker added that he expects economic growth to return to its long-term trend pace by the end of the year, and he sees limited effects from the rout in the subprime mortgage market.

The Federal Reserve next meets June 27-28.

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