Washington, Feb 25 (IANS): A senior US Federal Reserve official has signaled that the central bank is on track to raise interest rates in March despite escalating geopolitical tensions over Ukraine.

"Barring an unexpected turn in the economy, I believe it will be appropriate to move the funds rate up in March and follow with further increases in the coming months," Federal Reserve Bank of Cleveland President, Loretta Mester said on Thursday at a virtual event.

"The implications of the unfolding situation in Ukraine for the medium-run economic outlook in the US will also be a consideration in determining the appropriate pace at which to remove accommodation," she added.

Noting that the imbalances between demand and supply in both product and labor markets are contributing to the very high inflation readings, Mester said she expected US inflation to remain above 2 per cent this year and next, with inflation risks "tilted to the upside."

"Geopolitical events add upside risk to the inflation forecast even as they put some downside risk to the near-term growth forecast," she added.

Mester's remarks came after the US Labor Department recently reported that the consumer price index in January rose 7.5 per cent from a year earlier, the fastest annual pace in almost 40 years, Xinhua news agency reported.

The Fed signaled in January that the central bank is ready to begin a series of interest-rate hike in March to combat surging inflation as it exits from the ultra-loose monetary policy enacted at the start of the Covid-19 pandemic.

According to the CME Group's Fedwatch tool, investors are betting that there is a 100-per cent chance of a rate hike at the Fed's March meeting.