The Federal Reserve's policies have not been responsible for the dramatic run-up in prices in food and energy, Chicago Federal Reserve President Charles Evans told CNBC.
Moreover, Evans said the surge in commodities, which has pushed prices at the gas pump to $3.50 a gallon and sent some food prices sharply higher as well, are isolated and do not indicate that broadscale inflation is on the way.
"It has been interesting during this time period that people who I socialize with in a variety of formats who haven't ever paid attention to the state of monetary policy say, 'Hey Charlie, what's up with this QE 2 program and will I ever get anything for my passbook savings?'" Evans said. "Inflation is not always well-understood. We focus on the prices going up, the things that catch our attention."
The Fed's QE, or quantitative easing, program has come under fire for holding down the value of the dollar and thus increasing the real costs of the commodities that are priced in the US currency. The central bank is about halfway through a round of $600 billion in buying of Treasurys, a program often referred to as QE 2.
QE 2 is causing more divisions within the Fed itself. Dallas Fed President Richard Fisher warned Monday that he would vote to scale back or stop the Fed program if it proves to be "demonstrably counterproductive." And Atlanta Fed President Dennis Lockhart told a conference Monday that the central bank shouldn't rule out further bond purchases if unrest in the Middle East causes further weakness in the US economy.
Since the beginning of QE 2, the unemployment rate has fallen and the stock market has rallied, but the costs of commodities have soared and voices ranging from investor Warren Buffett to former Fed Chairman Alan Greenspan have been warning of inflation.
But Evans said focusing on food and energy doesn't provide a clear picture of what the government refers to as "core" inflation—the Consumer Price Index minus the traditionally volatile food and energy sectors.
"Car prices have been lower, rent has not been increasing very much, recreation has been negative. There are just many, many goods growing in the 1 to 2 percent range or less than that," he said "What we tend to forget is that technology is improving and those prices are going down. We have to pay attention to underlying inflation pressures."
Moreover, he said the actual drivers of the higher prices particularly in oil come from global growth and other geopolitical factors and not the central bank's dollar devaluation.
"The demand for the commodities and oil is really strong around the world," he said. "The supply isn't as strong and that puts upward pressure on it."
At the same time, Evans said he does not see the Fed extending quantitative easing as the economy is "growing nicely."