With high inflation hitting the US economy, it is time for the central bank to raise the benchmark borrowing rate, but there is no reason for a "big" early move, a top Federal Reserve official said Friday.

Instead, policymakers can "move steadily" to get the key lending rate off zero and back to more normal levels over the next year or more, New York Federal Reserve Bank President John Williams told reporters.

His comment downplayed expectations among many economists and investors that the Fed could move aggressively to raise interest rates by a half point in March to combat inflation, rather than its usual quarter-point increase.

"There's no need to do something extra at the beginning of the process of liftoff," Williams said in response to a question from AFP. "I don't see any compelling argument to take a big step" to start the process.

US inflation has hit the highest rate in four decades, battering President Joe Biden's popularity and striking households and businesses in the world's largest economy.

Williams acknowledged prices rose higher and lingered longer than he was expecting, and left the door open to more aggressive action if the situation demands it.

"What I'm trying to convey is that we'll be moving in a series of steps" to get the policy rate up from zero to "more normal levels" of 2-2.5 percent.

The official, who serves as vice chair of the policy-setting Federal Open Market Committee (FOMC), said the central bank could "either slow down or move faster. But I don't see the need to do that at the beginning."

His stance runs counter to others, like St. Louis Fed President James Bullard, who has called for the central bank to "front-load" its rate increases, and would be open to hiking outside the regularly scheduled meetings.

March hike 'appropriate'

However, Bullard appears to be an outlier.

Meanwhile, Fed governor Lael Brainard, Biden's nominee to become the central bank's vice chair under chief Jerome Powell, echoed Williams in saying it will be "appropriate" to make the first of a series of moves at the March 15-16 FOMC meeting.

And that would be followed by steps to begin to offload the massive stockpile of bonds built up as part of the Fed's pandemic stimulus efforts, she said.

"Given that we have some quite strong data, I do anticipate that it will be appropriate at our next meeting... to initiate a series of rate increases," Brainard said in response to questions following a speech at a conference hosted by The University of Chicago Booth School of Business.

And like Williams, she said the combination of steps "will bring inflation down over time while sustaining a recovery that includes everyone."

Like other central bankers and officials in the Biden administration, Williams attributed much of the inflation increase to pandemic-related issues, including supply and transportation snags and labor shortages.

While the rapid improvement in US employment is "great news," Williams said, "we have seen inflation rise to a level that's far too high."

"I am confident we will achieve a sustained, strong economy and inflation at our two percent longer-run goal," he said.

He now expects the Fed's preferred inflation measure will "drop back to around three percent" at the end of 2022 "before falling further next year as supply issues continue to recede."