In an interview with Yahoo Finance, Richmond Fed President Tom Barkin said he expects inflation to continue to cool into 2025, and hinted that the Federal Reserve could decide to slow down the pace of rate cuts. The possibility is an important one, with President-elect Donald Trump promising to impose harsh tariffs, and many investors fearful it could reignite inflation. While CPI has been sticky, Barkin says he sees progress, and consumers are playing a major role, saying:

"...Where I'm seeing it most is when I talk to people. And the way I'd put it is this, consumers have been frustrated by high prices for a while, but they're finally acting on it. They're buying on promotion, they're trading down, they're going to lower price outlets."

When it comes to tariffs, Barkin says it's too soon to tell what kind of impact President-elect's Trump's policies will have.

"...We're a long way away from knowing what we're gonna have in tariffs, how big they're gonna be, whether we have retaliation or not. And so it's awfully hard to know what the impact is on inflation. Obviously, if you increase the cost of goods coming in the country, that costs will at least in some part get passed on."

For Jennifer Schonberger's full discussion with Tom Barkin, visit Yahoo Finance's YouTube page.

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This post was written by Conor White.