(Bloomberg) -- Federal Reserve Governor Randal Quarles said favors gradual interest-rate increases and voiced optimism that the U.S. economy might be able to grow faster without overheating.

In remarks prepared for the Economic Club of New York on Thursday, he suggested that a tick up in the economy’s potential growth rate, if realized, could warrant a slower pace of rate hikes than would otherwise be appropriate. In a rare speech on the economy from the Fed’s vice chairman for supervision, who usually focuses on regulatory matters, he also pointed to inflation as a potentially faulty guide for monetary policy makers.

“There is enough reason to think that the productive capacity of our economy might be increasing so that we should not feel compelled to accelerate our pace,” Quarles said in the speech. “I also think there is enough doubt about current inflation as an infallibly reliable measure of current resource constraints that the continued gradual removal of accommodation is appropriate.”

The more potential growth increases, “the more gradual we can be in our removal of monetary policy accommodation,” Quarles said. “An assessment of the pace of potential growth will be an important input into what I view as the appropriate path of policy to achieve our objectives of maximum sustainable employment and price stability.”

President Donald Trump, who nominated Quarles to the Fed, has criticized the central bank for raising rates despite still-low inflation.

Quarles said that in pursuing the Fed’s twin goals for price stability and full employment, current price gain readings may not be the best signal.

“Perhaps inflation is just sending a signal of people’s trust in the Fed’s ability to meet its inflation objective,” Quarles said. “ There are risks in pushing the economy into a place it does not want to go if we limit ourselves to navigating by what might be a faulty indicator.”

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