U.S. Federal Reserve Governor Christopher Waller said that three interest-rate increases this year was a “good baseline” but there may be fewer or even as many as five moves, depending on inflation.

“Three hikes is still a good baseline; we will have to wait and see what inflation looks like in the second half of the year,” Waller said in an interview Thursday on Bloomberg Television with Kathleen Hays. “If it continues to be high, the case will be made for four, maybe five, hikes,” he said, but added that if inflation abated -- as many forecasters including him expect it will -- “then you could actually pause and not even go the full three.”

U.S. central bankers last month signaled they will raise interest rates three times this year and sped up the pace at which they are tapering their asset purchase program. A strong economy and labor market combined with consumer prices rising seven per cent last year have seen them pivot sharply toward combating the highest inflation since 1982.

Several Fed official this week said the central bank may have to raise as many as four times to get inflation under control. Patrick Harker said earlier on Thursday that he “could be convinced” that a fourth hike is needed if inflation isn’t brought to heel. Charles Evans, speaking in a separate event, echoed that view.

U.S. Fed Chair Jerome Powell told lawmakers earlier this week that it will take a long expansion to pull more people back into the labor force and a too-high inflation posed a “severe threat” to a prolonged period of growth.

“If inflation is just stubbornly high through the first half of this year we’re going to have to do a lot more,” Waller said, though he ruled out raising rates in March by 50 basis points -- as opposed to the 25 basis-point moves the Fed favored in its last tightening cycle -- in order to avoid spooking markets.

He also said that the Fed could deploy the balance sheet to help rein in demand.

“We can start to let the balance sheet run off earlier and that will take some pressure of longer-end rates and also lead to a tightening in policy,” Waller said.

Powell told lawmakers Tuesday that he expected the Fed to begin shrinking its US$8.77 trillion balance sheet later this year.