Federal Reserve officials revealed at their meeting last week that they don’t think inflation will come back down to normal until 2029.
asserted
inflation → reveal → 2029
The Fed considers 2% inflation to be healthy, and inflation hasn’t been that low since February 2021.
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inflation → consider → February
For years now, central bank officials have expressed confidence that they could return inflation to that target, but now, officials think that goal won’t even be reached until 2029, which would mark nearly a decade of unhealthy price growth.
uncertain
which → express → growth
At every other meeting, the Fed releases what is known as its “Summary of Economic Projections,” which gives insight into where officials think key macroeconomic indicators like inflation, interest rates, and economic growth will be in the coming years.
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indicators → release → years
At the Fed’s September meeting, participants pushed back the timeline for 2% inflation again.
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participants → push → inflation
Now, they see headline inflation falling to 2% in 2029, while running slightly above that in 2028.
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inflation → see → 2028
The Fed sees inflation falling to 2.3% by the end of next year.
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inflation → see → year
For reference, the Fed’s preferred gauge has inflation currently running at 3.7%.
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inflation → prefer → %
And the long runway for getting inflation back to normal is also notable given that, for a massive chunk of the population, this is the first time that inflation has been a major economic concern.
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inflation → get → population
Too-high inflation in the 1970s and 1980s also took years to vanquish.
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inflation → take → years
Inflation first took off in early 2021, with then-Fed Chairman Jerome Powell notoriously referring to the matter as a “transitory” one.
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Powell → take → one
Many thought inflation would soon settle back down, but it did not, and the Fed’s response to it has been panned in retrospect.
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response → think → retrospect
“I think again that era of monetary policy between 2020 and 2025 is really going to go down in textbooks as the textbook way on how not to deal with inflation,” Jai Kedia, an economist at the Cato Institute, told the Washington Examiner.
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Kedia → think → Examiner
“Specifically because of this reason — is that once it’s entrenched, you know it’s very, very hard to bring it back down,” Kedia added.
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Kedia → entrench → it
And it became quite entrenched as the years went on, becoming one of the most pressing issues facing the public.
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years → become → public
Many attribute high inflation under then-President Joe Biden as the chief reason that President Donald Trump got elected in 2024, and some surmise its continued staying power might be a key reason that Democrats win one or both chambers of Congress in the 2026 midterm elections.
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Democrats → attribute → elections
Headline inflation had moved lower initially during Trump’s second term, but then reignited after the war with Iran began.
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war → move → Iran
That wave of inflation, which the country is still grappling with, has been driven largely by a spike in energy prices.
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country → grapple → prices
And, as Kedia pointed out, inflation expectations have become rooted in consumer thinking.
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expectations → point → thinking
For instance, year-ahead inflation expectations jumped from 4% last month to 4.6% in September, according to a preliminary reading of the University of Michigan’s consumer sentiment index for August.
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expectations → jump → August
That is the highest level since June, and shows most consumers think inflation might get worse a year from now.
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inflation → show → June
The whole economy, and how it is perceived by consumers, has been shaded by these years of high inflation.
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it → perceive → inflation
“People have really changed their expectations,” Kedia said.
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Kedia → change → expectations
“They now view high inflation as much more likely than they did before the pandemic.
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they → view → pandemic
Most Americans have never lived through a sustained period of inflation, short of those people that have very vivid recollections of the 70s and 80s.
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that → live → 70s
Some economists also fear that such sentiment could turn out to be self-fulfilling.
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sentiment → fear → ?
If people expect that inflation is going to get worse, they could start acting and spending differently than they would have otherwise, which could exacerbate problems.
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which → expect → problems
Still, Johnny Taylor, the CEO of Society for Human Resource Management, the world’s largest HR association, pointed out during a Monday interview that while a “generation or two” has never experienced inflation like this, they also haven’t experienced such a long period of economic expansion.
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they → point → expansion
He pointed out that the last major economic downturn, setting aside the pandemic disruptions, was the 2008 recession.
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downturn → point → disruptions
“Call it 2008, 2009, pick a date to ’26,” Taylor told the Washington Examiner.
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Taylor → pick → Examiner
“That’s 17 years of an up economy.”
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That → ’ → economy
Taylor said he thinks the Fed officials could be correct in that it might take a few more years for inflation to return back to healthy levels.
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inflation → say → levels
“I have a lot of trust in the Fed,” Taylor said.
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Taylor → have → Fed
“I think there’s enough diversity of opinion, geographic diversity, other forms of diversity, political diversity, that they’re going to get it right, and they’re doing what they need to do now.
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they → think → what
That may cost you a little bit now to tame the economy and make sure that we do get to that 2% 2029 goal.
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we → cost → goal
For that reason, new Fed Chairman Kevin Warsh has been highly critical of such forward guidance and has been pushing for reform in that area of central bank policy.
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Warsh → push → policy
Forward guidance became routine starting after the 2008 financial crisis.
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guidance → become → crisis
Kedia said the Fed board gives the public “absolutely no clarity” on how they make such projections on inflation or unemployment.
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they → say → inflation
“But on the on the narrow question of the 2029 target to bring inflation back down, I think that’s pretty reasonable because it’s been elevated for so long,” Kedia said.
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Kedia → bring → inflation
“I don’t see any reason why it would come down within the next couple of years.”
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it → see → years
…and 3 more, not listed.
The Aporia
