Little has changed since December's policy meeting, Fed's Dudley says

As long as the US economy continues to grow at an above-trend pace, then the recent move lower in inflation expectations is not worrisome, a top US central bank official said.

However, should activity "unexpectedly weaken" then that would pose a concern.

"If inflation expectations become unanchored to the downside, it would become much more difficult to push inflation back up to the central bank’s objective. Japan’s difficult experience indicates the importance of avoiding such an outcome," the President of the Federal Reserve bank of New York, Wiliam Dudley, said.

Speaking at the Economic Leadership Forum, Dudley expressed confidence in the economy, pointing to strength in the automobile sector - although it was close to a cyclical peak - in 2015 and the passage of the fiscal year 2016 budget package last autumn.

"Not only does this budget package reduce uncertainty about the budgetary outlook, but its extension of a number of tax breaks and easing of the caps on domestic and military spending means that fiscal policy in 2016 will likely turn somewhat stimulative," the central banker said.

Regarding the recent behaviour of inflation expectations Stateside, the rate-setter pointed out that the Federal Reserve bank of New York's gauge of consumer price expectations - his preferred gauge - had declined over the past year by 22 basis points to 2.8%.

That was only a small drop, but it was noteworthy because it had retreated below where it has been during the survey's history.

"Up until July 2014, the median largely stayed in the range from 3.2 to 3.4 percent, and from July 2014 to July 2015 it remained near 3 percent," he explained.

Dudley also put emphasis on the need to avoid quick rises in interest rates due to the impact those could have on unemployment and the difficulty of avoiding the downward pressures on inflation that would result.