Minneapolis Federal Reserve President Gary Stern said the United States economy is "anything but fragile" and that the worst of the housing market crunch might be over.
But he said the Fed must remain committed to keeping inflation low -- especially as a probable slowdown in work force growth raises the potential for higher wage compensation.
"I would not expect inflation to accelerate even if compensation does, as long as the Federal Reserve remains committed to a stable, low inflation policy," Stern said in remarks prepared for a University of Dayton investment forum.
Asked about recent economic commentary by former Fed Chairman Alan Greenspan, Stern said Greenspan is "free to say whatever he wants." However, Stern added the markets have paid too much attention to Greenspan's opinions.
A copy of his remarks was made available in advance. Stern is not a voter on the Federal Open Market Committee in 2007.
Stern cited persistent gains in employment and consumer spending as positives for the "resilient and flexible" U.S. economy. But he said housing was a concern.
"To be sure, the housing sector has been a drag on activity and is of concern but I suspect that the bulk, although not all, of the adjustment in residential construction is behind us," he said.