It is "too early to relax our concerns" about price pressures, a top U.S. Federal Reserve official said, suggesting interest-rate cuts are not yet on the table, The Wall Street Journal reported Tuesday.

Fed Vice Chairman Donald Kohn also warned that long-term interest rates could jump if the Fed fails to cut short-term rates as much as the market expects or if there were a reversal in other factors holding down long-term rates.

A recent drop in core inflation, which excludes food and energy, is "encouragingly consistent" with the Fed's forecast for a gradual decline in inflation, Kohn said in a speech to the Atlanta Rotary Club on Monday.

But he cautioned against "extrapolating trends from a couple of months of data," and said some of the recent slowdown in inflation may reflect "one-time influences," in particular the indirect efforts of the big drop in energy costs.

Moreover, companies may be holding the line on prices to keep inventories from rising, and "that restraint on pricing will dissipate" once inventories are in line with sales.

The remarks by Kohn suggest little has changed in the central bank's outlook since it last met in December, said the report.

At that meeting, the Fed kept its short-term interest rate target at 5.25 percent, said its principal concern remained inflation, and its main choice in coming months would be whether to raise rates or leave them unchanged, the report said.

Source: Xinhua