The vice chairman of the FederalReserve, Donald L. Kohn, said last night that inflation trends seemed to be shifting "from up to down," while risks were still "tilted to the upside," The New York Times reported Saturday.

"The trend seems to be shifting and our expectation is that it will shift towards a gradual decrease," Kohn said in response to aquestion after his speech at the Federal Reserve Board's International Monetary Conference.

"But the risks around that expectation are still tilted to the upside," he said.

Other Fed policy makers have mentioned the potential risks of inflation recently in speeches. Some have suggested that interest rates might need to move higher to keep them in check, according to the report.

Kohn did not discuss the economic outlook or the path of interest rates in his speech Friday. But in answering a separate question, he said the Fed enjoyed "considerable credibility" on inflation, making the case for a numeric inflation goal "less clear."

The Fed's preferred inflation indicator, the personal consumption expenditures price index, minus food and energy, rose 2.4 percent for the 12 months ended in October, above the preferred range of 1 percent to 2 percent of several policy makers.

Kohn has not specified a preference range for inflation. In October, he said in a New York speech that the risks of inflation were "of great concern" than an economic slowdown.

Fed policy makers kept their benchmark interest rate at 5.25 percent for a third time on Oct. 25, saying that a slowdown in economic growth would probably help diminish inflation pressures.

The Fed also said the economy was likely to grow at a "moderate" pace.