The U.S. economy is recovering but the upturn will be slow and it makes no sense to raise interest rates in this climate since inflation is not a risk, a top Federal Reserve official said on Thursday.

I am worried about unemployment and I see an enormous amount of slack. I hear it everywhere, Federal Reserve Bank of Dallas President Richard Fisher told Reuters in an interview.

I am super-hawkish on inflation. I don't think that is where the risks are right now, Fisher said, speaking from his spacious top-floor office overlooking downtown Dallas.

His comments will reinforce the impression that the U.S. central bank is in no hurry to raise interest rates, despite guarded optimism that the U.S. economy is healing.

Fisher, who takes pride in a reputation as an anti- inflation policy hawk, said the U.S. central bank would not lose sight of its long-term obligation to keep price pressures at bay. But he stressed that this was not the current issue.

Right now that is not the risk. The risk is a disinflationary/deflationary risk, he said.

The U.S. central bank has cut interest rates to almost zero to protect the economy from the worst recession in 70 years and sees exceptionally low rates for an extended period.

Fisher, who is not a voting member of the Fed's policy-setting committee this year, said it would take a while to work off excess capacity in the economy.

I don't see a 'V'-shaped recovery. I see a couple of quarters of growth and then the question is where do we go from there. That is the real key question in 2010 and 2011.

Minutes of the Fed's September 22-23 meeting released on Wednesday showed staff at the Fed Board in Washington raised their forecast for growth.

Fisher said his own prediction was not as optimistic as the staff estimates. He was thinking in terms of third and fourth quarter growth rates in an annualized range of 2-3 percent.

But then the question is, what happens next? And I don't see the economy growing at a rate that gobbles up slack so quickly that it creates inflationary pressures, he said.

Fisher also stressed the Fed's exit from this accommodative monetary policy stance will be dictated by how growth evolves.

The extended period will be determined by economic circumstances, Fisher said. I agree the time to tighten is not now.

I will always err on the side of fighting inflation ... but I don't see the logic of tightening presently and I'm in the majority on that one, he said.

With rates almost at zero, the Fed has turned to unorthodox measures to support the economy, including purchasing $1.45 trillion of agency mortgage debt and $300 billion of longer-dated U.S. government bonds.

The September meeting's minutes showed some policy-makers favored increasing the size of mortgage backed securities buying, while one policy-maker wanted to stop short of purchasing the full amount that had been announced.

Fisher said that he felt the program had helped the U.S. housing market during a time of duress by lowering home loan rates, but signaled that he had not been among those pushing to increase the size of the purchases.

The mortgage backed securities program has assisted significantly the rates in that very, very important market at a time of duress. I think the Fed has done its duty on that front, he said.

But Fisher, a former money manager, made plain that he had not been in favor of the Fed's Treasury purchase program, which anyway ends later this month.

I don't think it was a big positive. It ran some risks and I am personally happy that project is over, he said. I think it sent a bit of shiver up the spine of many that we were going down the path of monetizing the deficit.

(Editing by Chizu Nomiyama; Editing by Diane Craft)

Inflation