Navigating the Last Mile: Can the Fed Tackle US Inflation?

US inflation has dropped from 9% to 3% over the past year, but bringing it down to the Federal Reserve's target rate of 2% is expected to be a slow and challenging process. Core inflation, which excludes volatile food and energy prices, remains higher than overall inflation and is likely to slow gradually. The stickiness of inflation could jeopardize the Fed's goal of achieving a "soft landing" without derailing the economy. Gas prices and the cost of services, reflecting healthy wage gains, are driving the increase in prices. Labor shortages and demands for higher pay could further contribute to inflation. While there are signs of hiring and wage growth slowing, economists expect core prices to rise at a 3.5% annual pace by year-end, above the Fed's target. The Fed has faced criticism for raising rates and potentially risking the job market.