Fed’s Goolsbee eyes housing as crucial for continued disinflation progress

Chicago Fed President Austan Goolsbee acknowledged yesterday that “progress continues towards 2% inflation target. He highlighted the decline in goods inflation, but points out the critical role of housing inflation in the coming quarters.

Goolsbee emphasized, “With goods inflation already coming down and nonhousing services inflation typically slow to adjust, the key to further progress over the next few quarters will be what happens to housing inflation.”

Separately, Richmond Fed President Thomas Barkin exhibited a more guarded stance. He expresses doubts about a smooth transition to the Fed’s inflation target, underscoring the complexity of the current economic scenario.

Barkin noted, “I’m just not convinced that inflation is on some smooth glide path down to 2%.” He acknowledges the recent decrease in inflation rates but attributes it primarily to the partial reversal of spikes seen during the Covid era, driven by high demand and supply constraints.

Barkin further points out that certain sectors, such as shelter and services, continue to exhibit inflation rates above historical norms.