Fed's Kocherlakota-inflation is domestically driven

MINNEAPOLIS Oct 21 (Reuters) - The recent rise in underlying U.S. inflation is driven largely by the Fed's easy monetary policy, not by the recent rise in global commodity prices, a top Fed official said on Friday.

Even though unemployment is still high, at 9.1 percent, wages and inflation can rise if companies cannot easily find the workers they need, Minneapolis Fed President Narayana Kocherlakota told the Harvard Club of Minnesota.

The Fed should be tightening policy rather than easing it, Kocherlakota said. But if conditions called for easing, the Fed's "weapons chest" is not empty, he said.

The Fed could use both bond-buying and forward guidance on interest rates to ease policy if needed, he said.