One of the Federal Reserve's top officials offered an upbeat assessment of the U.S. economy's ability to weather the recent rise in oil prices, saying that the recovery is gaining momentum and policy makers so far see no reason to curb their efforts to stimulate growth.

"We may be much closer to establishing a virtuous circle in which rising demand generates more rapid income and employment growth, which in turn bolsters confidence and leads to further increases in spending," Federal Reserve Bank of New York President William...