This note develops an econometric model of inflation dynamics to assess recent developments. We find that most of the rapid decline in price pressures achieved in 2023 owes to the normalization of supply chains. With supply-chain disruptions now largely resolved, future progress toward...

This note develops an econometric model of inflation dynamics to assess recent developments. We find that most of the rapid decline in price pressures achieved in 2023 owes to the normalization of supply chains. With supply-chain disruptions now largely resolved, future progress toward...

Many observers, including officials at the Federal Reserve, have focused on the need for wages to decelerate if progress toward reducing inflation is to be sustained. We agree that current elevated rates of wage growth would not be consistent with the Fed's 2 percent inflation target in the...