Inflation Is Still Too High
Bill Dudley, US inflation and financial conditions
US inflation remains elevated, with a broad range of underlying measures ranging from 2.4% to 3.3%.
Inflation has exceeded the central bank’s 2% objective for more than five years.
When this is the case, monetary policy should be restrictive.
There is little evidence that US monetary policy is currently restrictive.
The federal funds rate has been at the current level or higher for almost four years and the unemployment rate has been quite stable, at a level consistent with full employment for the past 2 years.
If policy had been restrictive then we should have expected to see the unemployment rate rising and inflation falling.
The notion that monetary policy is not restrictive is supported by the buoyancy of financial market conditions: high stock prices, tight credit spreads and moderate bond yields.
For example, the Fed’s financial conditions index estimated that the stance of financial conditions last month would push up real GDP by more than 1 percentage point over the next year.
The amount of stimulus to growth from financial conditions was the highest since early 2022, when the fed funds rate was near zero.
Bill Dudley Bloomberg 20 July 2026
Bill Dudley is a Bloomberg Opinion columnist. A former president of the Federal Reserve Bank of New York
DI 14 juli 2026
https://www.di.se/live/nye-fed-chefen-inte-ok-med-hog-inflation/
Inflation Is Still Too High — and Here to Stay
Inflation is still too high, with the average rate over the prior three months at 3.8%, almost double the Federal Reserve’s target of 2%.
The inflation rate may be the new normal, with some economists learning that inflation of more than 2.5% is much worse than thought, and the Fed may not be able to return inflation to its target.
It is easy to forget, but it wasn’t that long ago that policy makers wanted 3% to 4% inflation. For much of the 20th century, that level would have been considered a policy success. Then, for most of the 2010s, the inflation rate was below target, near zero, and it seemed too low.
Back then, many policy makers and economists thought 4% inflation was better than 2% because it allowed monetary policy more room to be effective.
Allison Schrager Bloomberg 14 July 2026
https://www.bloomberg.com/opinion/articles/2026-07-14/us-inflation-report-expect-higher-for-longer
There are any number of ways to measure exactly how tight conditions are, and the current bout of speculative exuberance makes it hard to believe that they’re very restrictive.
John Authers Bloomberg 14 november 2024
https://englundmacro.blogspot.com/2024/11/the-market-has-loosened-financial.html
Policymakers could leave their 2% target in place formally, but be all right with never quite getting there.
And then some years down the line, they could adopt a higher target.
https://englundmacro.blogspot.com/2025/10/inflationsmalet-overges-i-tysthet.html
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