Investing.com -- Federal Reserve Bank of Kansas City President Jeff Schmid said Tuesday that the central bank should not overlook the inflation impact from rising energy prices linked to the Iran conflict.

"This oil shock comes at a time when inflation already has been too high for too long," Schmid said in remarks prepared for an event in Oklahoma City. "With inflation already running hot, now is not the time to assume that the inflation from higher oil prices will be transitory."

Schmid said the increase in oil and gas prices will likely affect core inflation through items like airfares and other transportation costs. He noted that prices have been rising faster than the Fed's 2% goal for five years, and said he is concerned inflation will remain closer to 3%.

The Kansas City Fed chief said growth and consumption are strong even as hiring has been low. While the surge in oil prices will drag growth down modestly, he said the economy will probably absorb a significant portion of the increase.

"With many cross currents in the economy, some of which are pushing employment and inflation in different directions, policymakers face tradeoffs in pursuing this dual mandate," Schmid said. "As I weigh those tradeoffs, I'm more focused on the risks to inflation at this time."

Fed officials kept interest rates unchanged at their March 17-18 meeting. Fed Chair Jerome Powell said it was still too early to know how much higher energy prices would impact the economy. Some Fed officials have expressed concern about the surge in energy costs and have said it will likely drive inflation higher.