Fed's Goolsbee: Need to revisit the logic of looking through supply shocks

Sept 29 (Reuters) — Chicago Federal Reserve President Austan Goolsbee said Tuesday that allowing inflation to stay above the Fed's target for 5-1/2 years is "playing with fire," noting that the Fed may need to respond to a supply shock that has long-lasting effects. "It's an unpleasant situation... (but) I think we have to consider responding to those persistent shocks," Goolsbee said. Goolsbee said he is one of the more optimistic of Fed policymakers as far as his rate-path expectations are concerned, but before cutting rates "we've got to get some evidence that inflation is coming back down, that these things that are supposed to be temporary are in fact going away." (Reporting by Ann Saphir) ((Ann.Saphir@thomsonreuters.com; 312-593-8342)