That suggests that Fed policymakers could pause or possibly halt interest rate increases after the one expected at their meeting next month. Bies' statement echoed remarks made Thursday by Fed Chairman Ben Bernanke, who suggested that the cooling housing market could dampen economic growth this year.

At the very least, Fed economists will need time to analyze the effects of rate increases thus far before deciding whether more will be needed, Bies told reporters after she gave a speech on risk management at N.C. State University.

"We know monetary policy works with a lag ... anywhere from less than a year to two years," Bies said. "One of the challenges you have is seeing what's in the pipeline that's still working its way through [the economy], versus how much more do you still have to go."

The Fed has raised the rate on overnight loans between banks 15 times -- at every meeting since June 2004 -- pushing the rate up to 4.75 percent from 1 percent. Those increases -- which raise the cost of variable-rate business and consumer loans -- are intended to moderate economic growth and stave off inflation, though their effects are hard to determine.

However, the Federal Open Market Committee "generally feels we're in the ballpark of where we want to be," Bies said. She was referring to the key interest rate that she and 11 other members of the committee regulate. The committee consists of the seven Fed governors and five of the 12 Fed bank presidents.

The committee is to meet next on May 10 and is widely expected to boost interest rates another quarter point, to 5 percent.

Bies' remarks came after government data released Friday showed that the economy surged at an annual rate of 4.8 percent in the first quarter, its strongest showing in more than two years. Some economists think stronger-than-expected growth raises inflationary pressure and the likelihood of more rate increases.

Bies said she had not yet seen the data and could not comment on how it would affect the Fed's outlook on growth, inflation and interest rate policy.

But the Commerce Department report Friday also showed a slight decline in price increases in the first quarter, reinforcing expectations that the Fed will at least break from its two-year regimen of rate hikes.

A measure of core consumer prices that excludes food and energy costs fell to an annual rate of 2 percent, within the Federal Reserve's target range.

Separately, data from the Labor Department showed that wages and benefits rose at their slowest pace in seven years in the first quarter, further tempering the inflation outlook. Higher wages tend to boost demand for goods and services versus supply, bumping up consumer prices.

As for the effects of a housing slowdown, Bies said falling home prices would not directly dull inflation, though such declines might coincide with a broader economic slowdown.

Inflation could be fueled by continued surges in oil prices, which tend to have a cumulative effect on consumer prices. More increases in energy costs could significantly elevate concerns about inflation, Bies said.

"We haven't seen a lot of flow-through of energy prices to general prices yet," she said. But Fed policymakers will closely monitor that relationship, she said.

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