The U.S. economy still has excess labor and production capacity, Chicago Federal Reserve Bank President Michael Moskow said on Tuesday, adding that oil price rises have yet to spill into underlying inflation.
"My own judgment is there still are excess resources in the economy, both certainly on the labor market side and in facilities, plants and equipment," Moskow told reporters after a speech to a National Association of State Workforce Agencies forum in Washington.
"So I personally think there still is an output gap. I think it is closing and that we are growing at about potential growth, but I don't think it has closed at this point. But it is something we have to keep monitoring on a regular basis."
Earlier, he told the audience oil prices have not yet pushed up prices excluding food and energy.
"If you look at that core rate, you have not seen a significant increase in that core rate over this period when oil prices have gone up," Moskow said. "Now if it gets to the point where people believe that inflation overall and core inflation will be higher because of that higher price of oil then that's a very important consideration for us as monetary policy-makers."