Low U.S. inflation is not necessarily a deflation risk, a top Federal Reserve official said on Friday, according to Market News International.

Jeffrey Lacker said the United States could experience underlying inflation between 1 percent and 1.5 percent without running the risk of falling into the prices spiral that has plagued the Japanese economy for years, Market News said.

The Fed at a meeting this week said core inflation was lower than it prefers and that it was prepared to take action to reflate the economy if necessary.

Lacker called inflation "low and stable," Market News reported. The Fed's implicit target for inflation is between 1.7 percent and 2 percent.

An inflation gauge preferred by the Fed — the price index for personal consumption expenditures — posted a 1.5 percent gain in the 12 months through July. Core prices, which strip out volatile food and energy costs, rose by 1.4 percent.

Lacker said he prefers a 1.5 percent inflation rate, Market News reported, although it was not clear by what measure. Lacker said a recent rise in business investment and software is "great news."

He also warned that the housing industry is not likely to experience a sharp rebound in this economic recovery as it has in past recoveries.