US economic recovery now has “a firmer footing”, says Fed officials

Top Federal Reserve officials stated this week that the US economic recovery is gaining momentum.

Sandra Pianalto, a Cleveland Fed President, said that she expects US recovery to go further at a moderate pace and rising commodity and energy prices will have only temporarily pressure on broader consumer prices.

"The recovery seems to have established a firmer footing. I am seeing clearer signs of a virtuous cycle of growth," Pianalto said in a speech at the University of Akron.

Dallas Fed President Richard Fisher, speaking in Frankfurt, Germany, said the U.S. recovery was gathering momentum and needs no further Fed support.

"The Fed has done enough, if not too much, and we should do no more. In my opinion no further accommodation is necessary after June," Fisher said.

Meanwhile, Pianalto said that she does not see rising energy prices associated with political unrest in the Middle East and North Africa spilling over into broader inflation. But she called the oil price rise a "key risk" to the U.S. economy that bears monitoring.

"If the spike in oil prices is sustained, it will potentially slow the pace of GDP growth," she said. "Even if the growth consequences turn out to be relatively small, a sustained increase in the price of oil could cause some people to worry about higher inflation."

Pianalto said she does not think rising food and energy prices will have a sustained impact on the inflation rate. She expects inflation to rise only gradually to 2 percent by 2013.

"To cause a lasting rise in inflation, the increases in food or energy prices have to be large enough and persist long enough that they spill over and cause sustained increases in a wide array of other consumer prices. At this point, there is no evidence of broad spillover," she said.