Barkin comments that CPI data is "encouraging," but housing inflation risks still remain

Federal Reserve official Barkin’s latest remarks have attracted market attention. According to reports, this Richmond Fed president affirmed the recent CPI data performance, believing that inflation has improved. However, he also pointed out that housing inflation remains affected by the lack of October data, implying that inflation pressures in this sector have not fully subsided. This statement reflects the complex situation the Federal Reserve faces: signs of inflation improvement, but still requiring vigilance.

A Dual Perspective on Inflation Trends

Barkin’s “encouraging” assessment points to positive signals from CPI data, aligning with the Fed’s rate cut of 75 basis points last year. But this optimism needs to be understood within a broader context.

According to the latest news, the US PCE Price Index remains at 2.8%, still 0.8 percentage points away from the Fed’s 2% target. This indicates that although the inflation trend is improving, the absolute level remains relatively high. The combination of CPI and PCE indicators sketches an inflation picture that is not entirely optimistic.

Housing Inflation: An Overlooked Hidden Risk

Barkin specifically mentioned that housing inflation is affected by the lack of October data, which is noteworthy. Housing costs are one of the most heavily weighted categories in the CPI basket, and their trajectory directly impacts overall inflation levels. The missing October data means that the Fed’s assessment of the latest housing inflation situation has a time lag, potentially leading to incomplete information in policy decisions.

This also suggests that housing inflation may still be a drag on inflation decline. Compared to the rapid retreat of goods inflation, housing costs are more sticky and could become a constraint on the Fed’s future rate cuts.

What the Market is Waiting For

Barkin’s speech was published on January 13, the same day the US will release December CPI data. This data could have a much greater impact on the market than the speech itself.

If December CPI comes in below expectations, it will reinforce market expectations of continued inflation easing, potentially boosting stocks and risk assets. Conversely, if the data exceeds expectations or shows stubborn housing inflation, it could dampen market sentiment and reinforce expectations that the Fed will remain cautious.

Fed Policy Signals

From the intensive speeches of Barkin and other Fed officials, it appears the Fed is signaling to the market: current interest rates have entered a neutral zone, and policy is no longer pursuing “aggressive rate cuts,” but shifting toward fine-tuning. This suggests that the room for rate cuts in 2026 may be limited, and the market’s previous expectations of a 50-75 basis point cut need to be reassessed.

Barkin’s remarks both acknowledge inflation improvement and emphasize housing inflation issues, effectively saying: the Fed sees hope but will not let its guard down.

Summary

Barkin’s speech reflects the Fed’s true stance: inflation has improved but is far from over, housing inflation still requires attention, and policy will remain cautious. The market takeaway is not to expect rapid rate cuts from the Fed; upcoming CPI data will be key to confirming inflation trends. For the cryptocurrency market, the Fed’s policy direction remains a core variable influencing risk assets.