Chicago Federal Reserve President Austan Goolsbee said Thursday that the need for tight monetary policy may diminish even with strong GDP growth if the U.S. economy continues to see improvements in supply that would help further curb inflation.

The Fed's policy rate is already restrictive compared with inflation and the FOMC's long-term estimate of borrowing costs, he said during an online discussion hosted by the Princeton University Bendheim Center for Finance. “The question is how long do we want to remain in this restrictive of a territory?” he asked. The idea that the economy may be overheating with economic growth around 3% could be misleading, he said, suggesting there's still room for improvements in the supply chain and increases in labor supply to bring down inflation further.

While the Fed needs further progress slowing inflation, monetary policy will become even more restrictive as prices slow further, he added. (See: MNI INTERVIEW: Fed To Stay Patient Given Bumpy Inflation-Groen)