In 2022, US inflation reached a record high in over 40 years, causing the Fed to tighten monetary policy, raising interest rates to 5.25%-5.50% in July 2023. Up to the present time, as inflation has cooled and approached the 2% target, the top concern of investors is when the Fed will start cutting interest rates.
When tightening, the Fed uses the PCE price index as the inflation measure for its interest rate balancing model. Even Goolsbee (Chicago Fed) affirmed: The Fed's inflation target is PCE, not CPI in the statement on 02/14.
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