Here's a couple of interesting inflation data points. Two different groups at the New York Fed have constructed measures of underlying inflation, one called the Underlying Inflation Gauge and the other a more recent measurement called the Multivariate Core Trend. Both are based on similar models that deconstruct the price data, remove the pieces due to transitory shocks, and keep only the persistent common components. Naturally, both claim to be more accurate at predicting inflation trends than common measures like CPI or core PCE.
What's interesting about them is that both recorded large revisions last month that substantially reduced their current measures of underlying inflation. Both now estimate that underlying inflation in April was only 3.4%:
This is well under both the April core PCE rate of 4.7% and the April core CPI rate of 5.0%. If they're accurate, then inflation has already fallen to a rate only moderately above the Fed's long-term target—and will probably reach the Fed's target by the end of the year. It's yet more evidence that inflation is cooling off enough that there's no need for further Fed rate hikes.
Any argument for further Fed rate hikes is coming from the realms of political economy, moral philosophy, or scholastic theology, not economics as the term is normally understood.
There never was much argument for the Fed to be increasing rates as much or as often as they were to begin with, but that didn't stop them. Never was going to stop them.
And to answer the headline question: yes, of course it is. "Inflation" was always more about market consolidation and price gouging than underlying factors.
You beat me to your second point. If, as seems to be the case, much of the past year's inflation was really companies realizing that the market could bear a price increase and this was a great opportunity to impose it, then that effect is largely baked into the numbers already. The ability to keep doing it is quite limited in many cases.
Why can't we just stop at 3%? Sounds like a reasonable number. We averaged something like 5% in the 80s, and people seemed pretty happy with the economy.
Meanwhile, those pesky Canadians are raising rates: https://financialpost.com/real-estate/mortgages/rbc-raises-prime-rate-after-bank-of-canada-hike
Don’t they know it is supposed to be “Once cheap money, always cheap money.”? …
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