Fed's Poole: Recession Unlikely but Inflation a Risk

The U.S. economy will probably avoid a recession but inflation is also a risk and the Federal Reserve must not ignore this threat as it battles weak growth, one of the Fed's top policy-makers said.

"At any given time, policy-makers could pursue a powerfully expansionary policy to all but eliminate the possibility of a significant recession in the year ahead, but doing so would come at the cost and even likelihood of an unacceptable increase in the rate of inflation," St. Louis Federal Reserve Bank President William Poole said in remarks prepared for delivery at Truman State University.

"A substantial increase in the rate of inflation promises a larger recession later, as the country learned at such great cost in the 1970s," he said.

Poole is not a voting member of the U.S. central bank's policy-setting committee this year.