Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, said the central bank may have to raise interest rates when the unemployment rate is at 7 percent or higher.

Speaking in an interview today at the Bloomberg Washington Summit hosted by Bloomberg Link, he said the Fed will probably have to raise rates in mid-2013. Adding more monetary stimulus now would raise inflation risks without doing much to boost growth, he said.

“It could well be above 7 percent, and I think we have to prepare for that,” Lacker said. “I think it’s a misconception to think we have to get unemployment all the way down to 5 or some number like that before we raise rates.”

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Lacker has cast the only dissenting vote at each of the FOMC’s policy meetings this year. He has opposed the Fed’s statement that economic conditions will probably warrant “exceptionally low” levels of the federal funds rate at least through late-2014.

Lacker said it is “really tricky” for the Fed to find “that time when interest rates need to rise to prevent inflation pressures from emerging, before you see them emerge, before you see inflation move up steadily.”

Stocks have rallied on better-than-forecast corporate profits and signs of economic strength. The Standard & Poor’s 500 Index has risen more than 12 percent this year, the best start to a year since 1998.

Fed Chairman Ben S. Bernanke last week said the central bank is “prepared to do more” if needed to boost the economy, after leaving its policy unchanged. Central bankers also upgraded their forecasts for economic growth and unemployment.

Unemployment Forecast

Officials forecast the jobless rate would average 7.8 percent to 8 percent in the final three months of this year versus a forecast of 8.2 percent to 8.5 percent in January, according to central tendency estimates. The new forecasts are still far above policy makers’ estimates for full employment, which range from 4.9 percent to 6 percent.

Fed officials estimated the economy will expand 2.4 percent to 2.9 percent this year, compared with a January forecast of 2.2 percent to 2.7 percent.