Commentary argues inflation pressure extends beyond energy prices

Inflation remains above the Federal Reserve’s target despite the effect of elevated fuel prices, according to the commentary. It says inflation has hovered between 2.5% and 4% over the past three years and was about 2.5% before the war in Iran began.

Core inflation, excluding food and energy, is cited at 2.6%, while the Fed’s preferred inflation gauge excluding those categories is cited at 3.3%. The commentary argues that underlying inflation remains too high because credit is too plentiful and too cheap.

The piece says higher interest rates are the central bank’s tool for restoring price stability, while noting inflation has fallen sharply from its 2021 and 2022 peak after rates rose.

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