By Ann Saphir
June 22 (Reuters) - Chicago Federal Reserve President Austan Goolsbee said on Monday that with the labor market stable, he is focused on figuring out whether too-high inflation will stay that way or if it will recede as the effect of high tariffs fades and if the conflict in the Middle East gets resolved.
"We've been dealing with an inflation problem that's well above the target and has been going the wrong way," Goolsbee said on the Marketplace radio program.
"What's been on my mind is,
what is the evidence that this is going to be temporary, and that we're going to get back on path to 2%, which is what we've promised."
Fed Chairman Kevin Warsh last week said that none of the Fed's 19 policymakers had expressed support for raising rates at the June meeting, and Goolsbee did not dispute that characterization. He also said he agreed with Warsh that the Fed should stay away from giving "forward guidance" about its likely future interest-rate path.
At the same time Goolsbee indicated he is worried about inflation. The consumer price index, the best-known measure of inflation, rose 4.2% in May from a year earlier; the 12-month change in the personal consumption expenditures price index, which the Fed targets at 2%, was 3.8% in April, its most recent reading.
"The critical through line that we must determine is, in a situation in which the left of the decimal place number is a three or a four, how concerned are we that it's going to remain a three or a four, versus this is not going to be persistent and there are natural reasons why it would be coming down," Goolsbee said. "That's a crucial factor to consider in my mind."
Goolsbee said he is particularly focused on elevated services inflation, which is not directly related to higher oil prices from the Iran war or higher goods prices from tariffs.
"There are some signs, like the fact that some of the inflation came from tariffs and that's supposed to be one and done, that we could get some resolution in the Middle East and maybe that inflation would go away," he said. "The fact that we've seen it in services, which historically is pretty persistent, is a little more disturbing."
(Reporting by Ann Saphir; Editing by Nia Williams and Stephen Coates)
