Michael Gapin

Those aren't moving higher.

And he said services inflation, which is mostly about domestically generated inflation, that that's decelerating.

So they look at it and I think they say outside of tariffs, it looks like inflation is decelerating towards their target.

So once we get through with the pass-through, then goods prices can start to come down as well or at least stop rising.

And so they have a pretty favorable outlook.

So I think it's more like a matter of time for them.

How quick, how long does the pass-through last?

And then how quick does inflation decelerate after?

But a year ago, it was almost a year ago, right?

After Liberation Day, very different story, right?

They were very concerned about upside risk to inflation and inflation firming well above the target.

And I think as time has gone on, they've been able to see what part of inflation is

is linked to tariffs, what's happening there, okay, it's moving higher a little bit, but the rest of inflation still looks good.

In other words, no second round effects on inflation.

So I think their view is about as confident as you can get given the overall backdrop.

So I think it's fair to still have concerns, and I think it's right to point to the fact that we don't have the entire picture on inflation.

There's probably some catch-up still to be had in the January data, and certainly even into next April.

That's a legacy of the shutdown and the inability of the BLS to sample prices when they need to.

So there is probably some makeup effect there.

So I think we shouldn't be so quick to declare victory on inflation.