The Federal Reserve needs to be "anticipatory" and not wait too long to tighten monetary policy, Atlanta Fed President Dennis Lockhart said in an interview published Friday.

"We’re not there yet," he told Market News International.

Lockhart said that with rising market concerns about inflation, he could envision the Fed eventually raising U.S. benchmark interest rates while continuing to run an expansionary monetary policy.

The Fed has cut rates to near zero and pumped money into the financial system to revive lending and pull the economy out of a deep recession.

Signs have emerged in recent weeks that the economy may be stabilizing, raising some nervousness that the Fed’s policies, if not pulled back soon, could sow the seeds of dangerous inflation.

The Fed — the U.S. central bank — could buy additional long-term securities in response to a jump in long-term bond yields, Lockhart said.

He also said that the Fed needs to maintain its balance sheet, which has more than doubled as it fights the financial crisis, as shorter-term assets diminish. (Reuters)