Looking at core inflation less shelter, you could say that we have reached a growth rate that is consistent with the Fed's target of 2%.
Core CPI less shelter fell from 1.6% to 1.1% in January, while the slower moving Core PCE less shelter has been growing at or below 2% since September, having come in at 1.2% in January. As a leading indicator, the composite US output price index seems to confirm that broad inflationary pressures have normalised. [Figures 1,2]
Despite this, FOMC members have cast doubt on whether the Fed is prepared to declare victory. Figure 3 shows why.
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