Will Service Sector Prices Prevent the Federal Reserve from Reaching Its Inflation Target?

Former JPMorgan Chase Global Chief Economist, (Ph.D, Economics) & Current BrightQuery Chief Economist

In a recent client presentation, I was asked how U.S. inflation could decline from current levels if U.S. service prices remain stubbornly high.  The Consumer Price Index (CPI), excluding energy services, was used to make this argument.  In October 2023, it rose at a yearly growth pace of +5.5%, well above the Fed’s 2.0% inflation target, albeit lower t…