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What It Will Take for the Fed to Tame Inflation

The Washington Post  | Thu, Jul 14, 2022

by Bill Dudley

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Developments in the US economy have recently been going the Federal Reserve’s way, with price pressures peaking even as economic growth and strong payroll gains have been sustained. But don’t be fooled: The task of getting inflation back to the Fed’s 2% target remains extremely daunting, both practically and politically.

Economic indicators — including the employment report for June, industrial production, and the Institute for Supply Management’s activity indices — suggest that growth has slowed but the economy is not in recession. Meanwhile, energy prices have fallen, core inflation is decelerating, wage inflation might be declining and longer-term inflation expectations remain well-anchored. To some, this might look like the beginning of a soft landing and a potential triumph for the Fed.

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