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.

New York Fed President John Williams said yesterday at a conference,”Our job is clear: our job is to make sure we restore price stability, which is truly the foundation of a strong economy.”

Williams noted that the global supply chains are still disrupted, thus, “although goods prices have come down in last several months, there are signs this may not go as quickly as hoped.”

At the same time, inflation in core services, excluding food, energy and shelter, remains far too high, as driven by excessive demand relative to supply.

New York Fed President John Williams shared optimistic views on the US economy in an interview with FOX Business today. Williams highlighted encouraging signs that supply and demand are rebalancing, contributing to a “disinflationary process continuing.” He anticipates that inflation will keep decreasing throughout the second half of this year and into the next.

Williams expects interest rates to “come down gradually over the next couple of years” as inflation moves back towards the Fed’s 2% target and the economy follows a strong, sustainable path.

However, he refrained from specifying the timing of the first rate cut, stating, “I’m not going to make a prediction” about the exact path of policy.

Williams emphasized that future decisions will be data-dependent, noting, “I think that things are moving in the right direction” for eventual policy easing.