Fed's Lockhart-Fed balance not inflationary for now

ATLANTA, Jan 12 (Reuters) - The Federal Reserve's growing balance sheet is unlikely to ignite inflation pressure because of the weak economy, one of its top officials said on Monday.

"We have an economy in which bank reserves are not lent out; the multiplier effect ... is not working as it normally would," Atlanta Federal Reserve Bank President Dennis Lockhart said in response to a question.

"The velocity of money is down, all of this because of the slowness of the economy. I believe the growth that we see there in the balance sheet of the Fed is an appropriate response to that weakness and the problems in the financial sector."

Lockhart said the Fed -- the U.S. central bank -- would continue watching for inflation impulses.

"At this time I am comfortable we could grow that balance sheet and let it respond to the weakness without risking inflation." (Reporting by Alister Bull; Writing by Lucia Mutikani; Editing by James Dalgleish)