From the Editor's Desk

The Inflation Plateau

Just a few months ago, America seemed to have licked the post-pandemic inflation surge for good. Then, in January, prices rose faster than expected. Probably just a blip. The same thing happened in February. Strange, but likely not a big deal. Then March's inflation report came in hot as well. Okay—is it time to panic?The short answer is no. According to the most widely used measure, core inflation (the metric that policy makers pay close attention to because it excludes volatile prices such as food and energy) is stuck at about 4 percent, double the Federal Reserve's 2 percent target. But that's a long way from the crisis of 2022, when core inflation peaked at nearly 7 percent and the price of almost everything was going up dangerously fast. Instead, we seem to be facing a last-mile problem: Inflation has mostly normalized, but wringing out the final few percentage points in a handful of categories is proving harder than expected. There are two conflicting views of what exactly is going on, each with drastically different implications for how the Federal Reserve should respond. One camp worries that the Fed could lose control of inflation all over again; the other fears that the central bank will—whoops— unnecessarily bring the U.S. economy to its knees.


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