Chicago Fed Austan Goolsbee has highlighted the critical role of ongoing inflation data in shaping Fed’s future interest rate decisions. In an interview with Reuters, Goolsbee underlined that it is premature to make definitive decisions about rate adjustments at this juncture.

Goolsbee’s said, “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.”

He also emphasized the importance of not rushing into policy decisions based on incomplete data sets. “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,” he remarked.

Regarding the December CPI reading, Goolsbee noted that it was largely in line with expectations. However, he observed some variations within the data, specifically mentioning that services inflation was cooler than anticipated, while housing inflation was slightly higher.

Richmond Fed President Thomas Barkin told reporters after a speech overnight that the December CPI report was “about as expected. He noted a deceleration in the price rise for goods, while shelter and services costs continue to escalate at a more robust pace.

Barkin highlighted the growing disparity between the costs of goods versus shelter and services. He expressed caution about this divide, emphasizing the importance of vigilance in this area.

“This gap between services and shelter and goods is one that I am watching carefully,” he stated. His concern is rooted in the potential consequences of a shift from deflationary cycle in goods to a scenario where the economy is predominantly burdened by the rising costs of shelter and services.

“You would not want a goods deflationary cycle to end and find yourself disproportionately bearing the cost of shelter and services,” Barkin said.

Cleveland Fed President Loretta Mester, in an interview with BloombergTV overnight, emphasized that March might be too soon to consider a rate cut, citing ongoing efforts to combat inflation.

Mester expressed her view that more evidence is needed before considering a reduction in interest rates. “March is probably too early in my estimation for a rate decline because I think we need to see some more evidence,” she stated,

The December CPI report released yesterday, according to her, is a clear indication that “there is more work to do,” necessitating the maintenance of restrictive monetary policy. Nevertheless, she reassured that the CPI report does not suggest progress in inflation stall out.

Mester also pointed out that the risks associated with monetary policy have become more balanced. The primary focus for this year, as she outlined, is to calibrate policy effectively to maintain healthy labor markets while continuing the process of bringing inflation back to the 2% target.

New York Fed President John Williams acknowledged the “meaningful progress” made in balancing the economy and “bringing inflation down.” But he also emphasized that the Fed’s is far from over with the assertion. “Our work is not done” he said in a speech overnight.

Williams highlighted the need for continued restrictive stance in monetary policy “for some time”. He added, “it will only be appropriate to dial back the degree of policy restraint when we are confident that inflation is moving toward 2% on a sustained basis.”

Addressing the economic outlook, Williams described it as “highly uncertain” and stressed that Fed’s policy decisions will be made on a meeting-by-meeting basis. These decisions will be grounded in “the totality of the incoming data, the evolving outlook, and the balance of risks.”

Williams refrained from predicting when a rate cut might occur, stating, “I’m not making a prediction.” However, he also noted that the Fed is currently in a “good place” to assimilate incoming data and deliberate on future policy moves.