"The recovery seems to have established a firmer footing. I am seeing clearer signs of a virtuous cycle of growth," Sandra Pianalto, president of the Federal Reserve Bank of Cleveland said in a speech at the University of Akron.

Pianalto, whose views tend to be aligned with the center of the Fed's policy setting committee, called energy price rises associated with political unrest in the Middle East and Africa a "key risk" to the U.S. economy.

"If the spike in oil prices is sustained, it will potentially slow the pace of GDP growth," she said. "Even if the growth consequences turn out to be relatively small, a sustained increase in the price of oil could cause some people to worry about higher inflation."

Pianalto said she does not think rising food and energy prices will have a sustained impact on the inflation rate. She expects inflation to rise only gradually to 2 percent by 2013. "To cause a lasting rise in inflation, the increases in food or energy prices have to be large enough and persist long enough that they spill over and cause sustained increases in a wide array of other consumer prices. At this point, there is no evidence of broad spillover," she said.

Pianalto, who is not a voter on monetary policy this year, expects economic growth of slightly above 3 percent a year, with rising incomes and profits supporting retail sales and business demand. Housing, though, continues to be a drag on growth, she said.

"Many homes remain in the foreclosure pipeline, and we are looking at well over a year before the number of bank-owned properties begins to decline significantly," she said.