Oct. 13 (Bloomberg) -- Federal Reserve Bank of Chicago President Michael Moskow said central bankers may need more rate increases to curb inflation, bringing to five the number of Fed officials since Oct. 4 who have played down a possible rate cut.

``Some additional firming of policy may yet be necessary to bring inflation back to a range consistent with price stability in a reasonable period of time,'' Moskow said yesterday in a speech at the Four Seasons Hotel in Chicago.

Fed Board Vice Chairman Donald Kohn and bank Presidents Jeffrey Lacker, Richard Fisher and Charles Plosser have dashed investor speculation this month that the central bank would trim interest rates by January. Policy makers saw a ``substantial risk'' that inflation may not recede as expected at their last meeting on Sept. 20, minutes of the gathering show. A sixth official, William Poole of St. Louis, told Reuters yesterday that he wouldn't rule out rate reductions.

``My current assessment is that the risk of inflation remaining too high is greater than the risk of growth being too low,'' Moskow said during the fundraiser to benefit Roosevelt University's real-estate program.

Moskow, 68, is a non-voting member of the Federal Open Market Committee this year and made similar comments on Aug. 22. While meeting with reporters after yesterday's speech, he declined to answer a question about whether the Fed would lower borrowing costs.

Separately today, the U.S. government said retail sales last month fell 0.4 percent on a record decline in gasoline- station revenue. Purchases increased 0.6 percent excluding service-station receipts as consumers spent more at stores selling clothing, building materials and furniture.

Core Inflation

The Federal Open Market Committee kept the target for the overnight lending rate between banks at 5.25 percent on Sept. 20 for a second month, and is set to meet again in Washington on Oct. 24-25. Fed Chairman Ben S. Bernanke anticipates the economy will cool enough to ease inflation after 17 rate increases over two years that began in June 2004.

The Fed's preferred inflation measure, the personal consumption expenditures price index minus food and energy, has stayed at or above 2 percent for more than two years. The preferred range of policy makers such as Bernanke and Moskow is 1 to 2 percent.

``By my standards, inflation has been too high,'' Moskow said yesterday.

``Looking ahead, it's likely that core inflation will come down somewhat over time,'' the bank president said. ``Still, there is a risk that core inflation could run above 2 percent for some time,'' and in turn, lead to high inflation expectations.

The bank president told reporters he thinks there's a ``substantial risk'' that inflation will remain high, even though inflation expectations ``remain contained.''

Housing Market

The economy has slowed more than most economists expected just a few weeks ago. Forecasters at Goldman Sachs Group Inc. and AllianceBernstein Holding LP in New York have cut growth estimates for the third quarter to an annual rate of 2 percent or less. Moskow said the consensus estimate for third-quarter growth is 2.3 percent, and he expects the economy to expand below its long-run sustainable rate during the next year.

``There are factors restraining economic activity,'' Moskow said. ``The most notable one is weakness in the housing sector, and there also is uncertainty about how important this factor will be for overall growth.''

The Fed's summary of economic conditions, released yesterday, indicates most U.S. regions showed ``widespread cooling'' in residential housing with lower prices, rising inventories and slower sales.

David Seiders, chief economist at the National Association of Home Builders in Washington, sad he expects the U.S. housing market to slide the rest of the year, subtracting about 1 percentage point from second-half economic growth.

`Considerable Uncertainty'

Central bankers discussed housing at length during their Sept. 20 meeting and expressed ``considerable uncertainty'' over the extent of the slump, according to the minutes. The records show central bankers were less concerned about the risks of a sharp deterioration in growth and preoccupied with their credibility as inflation stayed ``higher than consistent with price stability.''

Moskow was the third Fed official to speak yesterday. Poole told Reuters that he sees more risks to growth than to prices and that ``considering rate cuts is going to be highly appropriate'' if economic growth falters.

In New York City, Fed Governor Frederic Mishkin, the board's newest member, spoke about financial globalization and emerging markets.

To contact the reporters on this story: Vivien Lou Chen in San Francisco at vchen1@bloomberg.net; Steve Matthews in Chicago at smatthews@bloomberg.net

Last Updated: October 13, 2006 10:02 EDT