“The surge in commodity prices over the past year appears to be largely attributable to a combination of rising global demand and disruptions in global supply,” Yellen said today in a speech in New York. “These developments seem unlikely to have persistent effects on consumer inflation or to derail the economic recovery and hence do not, in my view, warrant any substantial shift in the stance of monetary policy.”

Yellen is the second top lieutenant of Chairman Ben S. Bernanke to suggest this month that the Fed will complete its $600 billion of bond purchases aimed at boosting growth. William C. Dudley, president of the Federal Reserve Bank of New York, said April 1 that the recovery is “still tenuous,” while Bernanke said April 4 that higher commodity prices may have a “transitory” effect on inflation.

At the same time, “we cannot be complacent about the stability of inflation expectations,” Yellen, 64, said in the text of remarks to the Economic Club of New York. The Fed would have to tighten credit should commodity prices spark a “wage- price spiral” that sends underlying inflation up at an “unacceptable pace,” she said.

Dollar Stronger Versus Euro

Treasuries were little changed, with the 10-year note’s yield at 3.58 percent at 12:22 p.m. in New York. The Standard & Poor’s 500 Index was also little changed at 1,328.68, and the dollar remained stronger against the euro at $1.4459.

The Journal of Commerce-ECRI Commodity Price Index today reached the highest since at least 1985, indicating an annualized growth rate of 38.7 percent. The average U.S. price of regular gasoline increased 23 percent to $3.77 a gallon this year on higher oil costs stoked by unrest in the Middle East and Africa.

Developing nations will grow 6.5 percent this year and next while advanced economies will expand 2.4 percent in 2011 and 2.6 percent in 2012, the International Monetary Fund forecast today in its World Economic Outlook report. Among major emerging markets, the fastest growth will be in China, which will expand 9.6 percent in 2011 and 9.5 percent next year, according to IMF projections.

Yellen’s remarks show how she and top Fed officials including Bernanke are reluctant to follow the lead of their counterparts at the European Central Bank, who are tightening credit in an effort to combat inflation.

‘Elevated’ Employment

Yellen used the word “elevated” four times in her speech in referring to the 8.8 percent jobless rate. She used “transitory” five times in referring to the effects of commodity prices on broader inflation, the same word the policy- setting Federal Open Market Committee used in its March 15 statement.

The FOMC, which next meets April 26-27 in Washington, said at its last session March 15 that the economy is on a “firmer footing” and unanimously affirmed plans to buy the Treasuries through June.

Policy makers were divided when it came to discussing what comes next, with a “few” officials saying tighter credit may be warranted this year, while a “few others noted that exceptional policy accommodation could be appropriate beyond 2011,” minutes of the meeting released April 5 showed.

“There can be no question that sometime down the road, as the recovery gathers steam, it will become necessary for the FOMC to withdraw the monetary policy accommodation we have put in place,” Yellen said today. Leaving monetary policy “broadly unchanged” may be the best response to “shocks” in commodity prices, Yellen said.

Tokyo Speech

Dudley, 58, speaking in Tokyo earlier today, said the Fed “shouldn’t be overly enthusiastic about tightening monetary policy too early” because the U.S. labor market is likely to have “excess slack” at least through the end of 2012.

The ECB last week raised its benchmark interest rate by a quarter percentage point to 1.25 percent. The Bank of England kept its main rate at a record low of 0.5 percent. Central banks in the largest emerging-market economies, including China, Brazil and India, have been raising rates this year.

The U.S. economy doesn’t seem to be experiencing the kind of “sharp rebound” that usually follows a deep recession, Yellen said. The construction industry is hampered by vacant homes and “remains in the doldrums;” spending by state and local governments “seems likely to remain limited by tight budget conditions;” and in the labor market, “job opportunities are still relatively scarce,” she said.

Price Measure

In releases since the Fed meeting, the Commerce Department reported that the central bank’s preferred price measure, which excludes food and fuel, was up 0.9 percent from a year earlier in February, the most since October. Including all items, prices rose 1.6 percent, compared with a 1.2 percent 12-month increase through January, the biggest monthly increase since December 2009.

The economy added a greater-than-forecast 216,000 jobs in March, and the unemployment rate fell to the lowest level in more than two years, marking a drop of a full percentage point over four months. At the same time, service industries expanded less than forecast in March, a sign the biggest part of the economy is trailing gains in manufacturing.

“I see weak demand for labor as the predominant explanation of why the rate of unemployment remains elevated and rates of resource utilization more generally are still well below normal levels,” Yellen said.

Federal Reserve Bank of Minneapolis President Narayana Kocherlakota and Federal Reserve Bank of Philadelphia President Charles Plosser have argued that some of the unemployment in the economy may be “structural,” as some industries such as construction shrink.

Yellen, a former economist at the University of California at Berkeley, became the Fed’s No. 2 official in Washington in October after serving since 2004 as president of the San Francisco Fed. She served a prior term as a Fed governor from 1994 to 1997 before chairing President Bill Clinton’s Council of Economic Advisers until 1999.