The economy today faces many pitfalls, but I don’t believe that runaway inflation is one of them.

“I can’t go anywhere in my district and have people not ask me about inflation” in items including gasoline, groceries and paper products, Hoenig said to reporters today in Washington. The Fed needs to “calm inflationary fears” by raising interest rates, and “if we don’t do that, then I think they will build over time,” he said.

Fisher, who has criticized the Fed’s asset purchase program and expressed concern about rising prices, said the central bank has “successfully fought off” deflation.

“There is a lot of liquidity in the system,” Fisher said.

Consumer spending growth is likely to be somewhat restrained for a time as households adjust to these higher [energy] prices. I would be concerned if I expected further price increases. But at this juncture, futures markets are pricing in modest declines in petroleum products. If the markets are right, the effect of energy prices on consumer spending should only be temporary.

Less than a year ago the prevailing concern was not that inflation was becoming too high but that it was becoming too low. Indeed, some feared that the U.S. economy was on the verge of a deflationary spiral. I was not one of them; nor do I believe that we are in imminent danger of a strong acceleration in inflation. Yet the swing in views does concern me. It suggests that the public’s confidence in the Federal Reserve’s commitment to maintain price stability is not as firmly established as I would like.

“Core inflation is a much better signal of where inflation is going to go in the future,” Kocherlakota said in response to audience questions after a speech today in Helena, Montana. “There’s really not much signs of inflationary pressures building up.”

[T]he surge in commodity prices over the past year appears to be largely attributable to a combination of rising global demand and disruptions in global supply. These developments seem unlikely to have persistent effects on consumer inflation or to derail the economic recovery and hence do not, in my view, warrant any substantial shift in the stance of monetary policy.

Based on the behavior of the median CPI, I don’t expect recent rises in food and energy prices to cause a broad spillover into a wide array of consumer prices, or in other words, a lasting increase in inflation. Specifically, I expect the underlying trend in broad consumer prices to rise only gradually toward 2 percent by 2013.

Moreover, the rise in commodity prices is likely to put further upward pressure on headline inflation in the coming months. Provided commodity prices level off around current levels, the effect on inflation should be transitory. But we will need to ensure that commodity price pressures do not cause inflation expectations to become unmoored. If that were to occur, it would be more difficult to keep inflation in check.

To sum up, economic conditions have improved in the past year. Yet, the recovery is still tenuous. And, we are still far from the mark with regard to the Fed's dual mandate. In particular, the unemployment rate is much too high.

As the United States continues to ease policy into its recovery, once again there are signs that the world is building new economic imbalances and inflationary impulses. I would suggest also that the longer policy remains as it is, the greater the likelihood these pressures will build and ultimately undermine world growth.

While short-term measures of inflation have accelerated in the last few months, I hold to the view that this trajectory will not continue. I continue to see the Federal Reserve's inflation objective I just outlined as attainable.

That said, like my colleagues on the FOMC, I continuously monitor performance against our price stability objective. This involves monitoring not just inflation today but importantly the course of inflation expectations, whether derived from surveys or pulled from financial market prices. I am prepared to support a change of policy if evidence accumulates that the low and stable inflation objective is at risk.

[L]ke my colleagues on the FOMC, I continuously monitor performance against our price stability objective. This involves monitoring not just inflation today but importantly the course of inflation expectations, whether derived from surveys or pulled from financial market prices. I am prepared to support a change of policy if evidence accumulates that the low and stable inflation objective is at risk.

[C]ontrary to popular opinion, Federal Reserve officials do actually eat and fill up their gas tanks. The FOMC's mandate, as I see it, is to control the inflation rate we all experience—so-called headline inflation. In other words, I interpret the Fed's price stability mandate as requiring the FOMC to manage the growth rate in the average of all prices, including food and energy.

... it's our job to control that headline inflation over the course of time. It's not feasible to exert such control day-to-day or month-to-month or even quarter-to-quarter. But monetary policy can control the rate of overall inflation over the medium term. In operational terms, I think growth in overall consumer prices around 2 percent per year through a period shorter than the proverbial "long term," say, a medium-term period of three or four years, is consistent with the Fed's price stability mandate.

While short-term measures of inflation have moved up rather strongly in the last few months, I hold to the view that this trajectory will not persist. I continue to see the Federal Reserve's inflation objective I just outlined as attainable.

I expect the underlying trend in broad consumer prices, which is currently quite low, to rise only gradually toward 2 percent by 2013.

WSJ:  How will you judge when it will be the right time to begin tightening policy?

LACKER: Tough, tough question. It is really hard to write down a recipe or a check list about this. The growth rate matters, more than the overall magnitude of slack in the economy. I would again emphasize that we need to be sure we act before inflation expectations shift. We need to act in a way to prevent inflation expectations from shifting.

See Chairman Bernanke's comments on the same topic earlier in the week.