U.S. policy-makers must not wait too long to raise interest rates with inflation unlikely to stay at low levels as the economic recovery picks up steam, a top Federal Reserve official said on Tuesday.

U.S. inflation has been hovering around 1-2 percent since early 2009, and some recent readings have been below that range.

I believe inflation is unlikely to stay that low. In fact, the public apparently expects higher inflation in the future, which suggests that policymakers will need to avoid waiting too long to raise rates, Richmond Federal Reserve Bank President Jeffrey Lacker said in remarks prepared for delivery at a conference in Greensboro.

The Fed slashed its benchmark interest rate target to near zero in December 2008 and has kept it there since to aid economic recovery from a severe recession.

At its last meeting, the U.S. central bank reiterated its pledge to keep interest rates extraordinarily low for an extended period.

Lacker, who is not a voting member of the Fed's policy-setting Federal Open Market Committee this year, is generally seen as one of the more hawkish top Fed officials on inflation.

He told the Piedmont-Triad Regional Economic Outlook conference that the U.S. recovery is gradually picking up steam, driven by consumer spending and business investment in equipment and software. He said recent data support the idea that the U.S. economy is on a sustainable upward trajectory.

Housing and commercial construction, however, are likely to lag the recovery, he said.

Lacker said he expects jobs growth to continue, but warned it will take some time to make substantial progress reducing the ranks of the unemployed.

We are already seeing evidence that employment is on the path to steady growth, Lacker said.

U.S. nonfarm payrolls grew at the fastest pace in four years in April, data showed last week, as private sector employers ramped up hiring. The unemployment rate, however, rose to 9.9 percent as the size of the labor force increased.