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Federal Reserve of New York President William McDonough, who is also Vice Chairman of the Federal Open Market Committee, spoke to a group at the College of St. Rose in Albany, New York, this afternoon. In his prepared statements, McDonough repeated views that he expressed a few weeks ago. He warned that inflationary imbalances continue to exist in the U.S. despite gains in productivity. McDonough said that while it might be tempting to sit back and declare victory against inflation, nothing could be more foolish. McDonough cited the need to remain vigilant given the increase in costs in the service sector, an area that comprises the bulk of the Consumer Price Index. He warned that firming global economies have put upward pressure on worldwide commodity prices, causing rising prices in other areas in addition to oil. The FOMC meets on June 27 and 28 to decide the future of short-term interest rates.