Yellen says Fed to guard against inflation spiral

HONOLULU, Feb 7 (Reuters) - San Francisco Federal Reserve Bank President Janet Yellen said on Thursday that removing the current level of monetary stimulus will be key to preventing the emergence of new asset bubbles.

Yellen, answering questions from the audience after a speech on the economic outlook, said the Fed's top priority right now is guarding against "extreme downside risks" to the U.S. economy.

Yellen said it was key that the Fed avoids an inflation spiral such as the one that occurred in the 1970s.

Current inflationary factors in the U.S. economy, such as the weak U.S. dollar and high energy prices, should level off over time, she said. (Reporting by Ros Krasny; Editing by Alan Raybould)