Jan 11 (Reuters) - Chicago Federal Reserve President Austan Goolsbee on Thursday called 2023 a "hall-of-fame" year for falling inflation, which has paved the way for a few U.S. interest rate cuts in 2024 as long as that trend continues.
At the same time, Goolsbee said, he needs to see more data confirming the recent easing in price pressures to judge how soon or how fast those cuts in borrowing costs should take place.
"I still think that the primary determinant of when and how much rates should be cut will be driven off what's happening to the inflation data, and are we meeting the mandate goals," Goolsbee told Reuters in an interview. "When we have weeks or months of data to come, I don't like tying our hands ... We don't make decisions about March, June and whatever, in January."
The Fed's rate-setting committee last month voted to keep the U.S. central bank's policy rate in the 5.25%-5.50% range, where it has been since last July, and signaled rate cuts this year, with the median of policymakers' individual projections pointing to a 4.6% policy rate by the end of 2024.
One policymaker forecast a below-4% policy rate by the end of this year.
"I wasn't the lowest," Goolsbee said in the interview. "I was closer to the median."
'GOLDEN PATH'
Data published earlier on Thursday showed the consumer price index (CPI) rose 3.4% in December from a year earlier. Goolsbee said that reading was "pretty close" to expectations, though he added that services inflation was cooler than he had expected and housing inflation came in a bit hotter.
Still, he said, the latter may have limited implications for the Fed's 2% inflation target, which is measured by a different gauge - the personal consumption expenditures price index - within which shelter inflation is given less weight.
And other data suggest rents are coming down, which should eventually factor into overall inflation readings, he said.
Goolsbee has frequently said he believes that the Fed has a shot at finding a "golden path" to bringing down ongoing high levels of inflation without also causing unemployment to surge. So far "we're still on it," he told Reuters.
"The inflation rate came down an astounding amount for any year, much less a year in which the unemployment rate did not go up," he said.
Inflation, as measured by the CPI, started last year at 6.3%.
Data released last week showed the unemployment rate was 3.7% in December, just one-tenth of a percentage point above where it was when the Fed began raising interest rates from the near-zero level in March 2022.
There are risks to that path, Goolsbee said, including if housing inflation persists or if there are new supply shocks, such as what could occur from disruptions of shipping in the Red Sea.
But the risks this year are different from last year in that they also include the potential that monetary policy could stay tight for too long, causing unemployment to rise, he added.
The Fed's mandate is twofold: stable prices and maximum employment. With price pressures still too high, the Fed's rate-setting decisions have been primarily focused on getting inflation back to the 2% target.
"If it continues to be clear that we are on (the) path to get back to that, then we also start paying more attention to the other side of the mandate," Goolsbee said. (Reporting by Ann Saphir; Editing by Paul Simao)
