Influencing Inflation

CPI inflation is 8.5%. Market-based inflation expectations (MBIE) one year from now are 4.8%, MBIE over the five-year period starting a year from now are 2.32%, and MBIE over the five-year period starting in five years are just 2.26%. These low forward-looking inflation numbers strongly suggest the market, which isn’t necessarily correct, thinks our high inflation is unlikely to persist. This should make the Fed’s job of lowering inflation easier.