By Paul Kiernan 

DALLAS -- Two Fed officials said Friday they remain committed to a gradual path of interest-rate increases, indicating they see no need to lift borrowing costs more aggressively because of firming inflation.

"There are a host of reasons why I think we need to be moving gradually, not the least of which is, that's what we told people that's what we're going to do," Atlanta Fed President Raphael Bostic said during a panel discussion at a conference here. "Absent some really, really big information, I think we're in a position where we can continue to do that without a lot of costs."

Dallas Fed President Robert Kaplan also said he favored "gradual" rate rises, using a term the central bank has employed to describe its intended pace of policy tightening without specifying how much and how quickly they would move.

The Fed raised its benchmark short-term rate three times last year in quarter-percentage-point steps and in March penciled in three increases this year. Some central bank officials, however, say they could see moving four times this year, depending on how the economy performs.

Officials raised their benchmark rate in March to a range between 1.5% and 1.75%. They left the rate unchanged at their May 1-2 meeting but signaled in the minutes of the session, released Wednesday, that they likely would raise it at their next meeting, June 12-13.

Consumer prices rose 2% in the year ended in March, according to the Fed's preferred gauge, hitting the central bank's inflation target after running below it for most of the past several years.

Chicago Fed President Charles Evans, speaking on the same panel Friday, noted the recent rise in price pressures and said, "You wouldn't want inflation to pick up too much. So that could be consistent with a faster pace" of rate increases.

But officials at the May meeting said it was too soon to be sure inflation would stay near their goal after years of persistent weakness, according to the minutes.

Mr. Kaplan said Friday that businesses' pricing power appears to have grown more limited in recent years, possibly leading to more muted inflationary pressures even at low rates of unemployment.

Mr. Kaplan, Mr. Bostic and Mr. Evans all said Friday it was difficult to assess the impact of technological innovations on productivity, wages and inflation, and their implications for monetary policy.

Mr. Bostic, noting Amazon's plans to boost the price of its Prime membership service by 20%, said giant tech companies' domination of certain sectors of the economy could put upward pressure on prices. "That could mean we could wind up with a much less competitive environment," he said.

Mr. Evans said that while "the Fed's job is really hard," monetary policy makers have always had to make decisions in the face of uncertainty and economic change.

All three men said the Fed is close to reaching, or has reached, its so-called dual mandate to achieve the healthiest job market possible and low, stable inflation.

Therefore, Mr. Kaplan said, the Fed should be raising its benchmark rate toward a neutral level that neither spurs nor slows economic growth. He said that rate is likely between 2.5% and 2.75%.

He is less sure what to do once the benchmark rate arrives at neutral. "I think we're going to have quite an agonizing debate for lots of reasons...as we move along the path."

Write to Paul Kiernan at paul.kiernan@wsj.com

(END) Dow Jones Newswires

May 25, 2018 16:13 ET (20:13 GMT)