UPDATE 1-Fed's Lockhart sees hope that inflation slowing

(Adds more Lockhart remarks, background)

WASHINGTON, May 16 (Reuters) - U.S. inflation is too high but may be slowing and the economy is suffering a "pronounced and serious downturn", Federal Reserve Bank of Atlanta President Dennis Lockhart said on Friday.

"Inflation has been elevated since mid-decade, basically since 2005. For my own comfort zone, it is at an uncomfortable level," he told CNBC television in a live interview.

"My base-case forecast is that the weak economy will bring inflation down. And in fact, if you look at some of the information, the data we've seen in the last couple of cycles ...it has slowed," said Lockhart, who is not a voting member of the Fed's interest rate-setting committee this year.

Growth in the consumer price index moderated to 0.2 percent in April from the previous month's 0.3 percent gain. Core inflation, which strips out energy and food prices, was up by an even more modest 0.1 percent.

The Fed has slashed interest rates by 3.25 percentage points to 2 percent to offset the fallout from a crisis in the country's once red-hot housing sector after the collapse of the subprime mortgage market.

Economists are beginning to think that this muscular policy response, together with a fiscal stimulus to put money back in pockets of U.S. taxpayers, could help the country escape a recession. Lockhart signaled that he shared this view.

"We're in a pronounced and serious downturn, but we are growing...there is a good possibility that we are simply in a low-growth period," he said.

"On a technical basis we may avoid recession, but we're in a weak economy right now," Lockhart added, referring to the long-standing convention that a recession is marked by two consecutive quarters of economic contraction.

Investors are betting that the central bank has reached a point in its rate-cutting cycle where it feels will give the economy enough stimulus to recover, and it may begin raising rates again this year.

Lockhart ducked the question, but made plain that he was not in a hurry to start raising rates.

"I am not going to speculate on what we do with rates as we go forward. I would say that we are not out of the woods... it is not time to light the cigar.

"And therefore I think that policy has to remain flexible to deal with whatever developments come," he said, although he also acknowledged that it was "hard" to take rates below zero, in a nod to the fact that borrowing costs were already low.

(Reporting by Alister Bull; Editing by Chizu Nomiyama)