(Reuters) – Chicago Federal Reserve President Austan Goolsbee expects “many more rate cuts over the next year” as the U.S. central bank struggles to stem inflation without dealing too much of a blow to the economy, including the labor market.

Inflation is “well below” its peak and has moved closer to the Fed’s 2% target in recent months, the central banker said in a speech he was scheduled to deliver Monday at the annual conference of the National Association of State Treasurers.

He notes that the 4.2% unemployment rate is considered by many to be full employment, which is the Fed’s other goal.

“Fundamentally, we would like to freeze both sides of the Fed’s dual mandate,” Austan Goolsbee said. “Yet rates are at their highest levels in decades. It makes sense to hold rates there when you want to weight the economy, not when you want to keep things the same,” he said.

The Fed cut its key interest rate by half a percentage point last week, a larger initial cut than usual.

“I support an initial step like this – the 50 basis point cut in the federal funds rate announced last Wednesday – which signals a return to a more thoughtful reflection on both sides of the mandate,” Goolsbee said.

“If we want a soft landing, we cannot be late,” he warns.

The Chicago Fed president has been advocating for months a reduction in key rates, which the central bank has kept unchanged for more than a year even as inflation slowed considerably.

“We need to think about employment risks as well, not just inflation… and that probably means many more rate cuts over the next year,” he added.

(Written by Ann Saphi, Diana Mandiá, edited by Sophie Louet)

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