The rate of inflation has been falling and the pace of the decline has been increasing. If the Fed wants to level off at its target rate, it needs to start reducing rates and slowing down the rate of descent.

The inflation rate came down in 11 of the last 12 months, but the data show this only after you remove seasonal variation in the inflation rate. Unfortunately, the seasonally adjusted versions of the CPI that the Bureau of Labor Statistics releases remove only part of the seasonal fluctuations. Confusion about the seasonality that remains could explain why so many people have been slow to recognize that inflation has been falling steadily for more than a year.

Today, Jay Powell will show us what type of pilot he is. By repeatedly raising interest rates, he has cut power many times. There is no doubt that we are descending; the rate of inflation is unambiguously coming down. But we are still too high. Will he follow a stable plan and make adjustments to the timing? Or fly by the seat of his pants and yank back the throttle one more time? The indications are not good. We'll know within minutes.

To understand the trend in the inflation rate, it is important to compare the raw (i.e. not seasonally adjusted) month-to-month rates with the rates from one year before. This comparison offers a very different impression from an analysis that looks only at the recent trend in the seasonally adjusted inflation rate. The year-to-year comparison of raw rates suggests that inflation has come down substantially in the last 12 months.

I wonder if Kevin McCarthy understands that when you pull this kind of stunt, things can go wrong in ways you don’t anticipate.