RICHMOND, Va. — Reiterating his warnings about increasing inflation as the recovery proceeds, Richmond Federal Reserve Bank president Jeffrey Lacker Friday said the Fed must be careful to withdraw its monetary stimulus as the economy becomes “strong enough and well-enough established.”

Lacker, in remarks prepared for delivery to the Risk Management Association, said the Fed has the ability to either raise the rate of interest it pays on reserves or to drain reserves, but said the key is how and when to use its tools.

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