There's a lot of talk about high inflation rates, and what the Fed has to do to combat them, including causing a recession. It's true that inflation is high, b

There's a lot of talk about high inflation rates, and what the Fed has to do to combat them, including causing a recession. It's true that inflation is high, but the data shows us that most of this is being caused by factors not related to high economic demand: it's energy and food. Core CPI also increased, but it's tempered considerably: the annualized rate of the latest month over month core CPI change is now under 4% (3.9%), having fallen from an annualized m/m rate of change of 6.5-7.5% a few months ago. 3.9% is a little higher than our target of 2%, but not as alarming as the headline rate of total CPI. Everyone made fun of the claims of "transitory" inflation from late last year, but it's looking like -- except for energy and food, which are being driven by international events -- the drivers of base inflation really were one-off events, and are not continuing at the same rate. For example, international freight increased dramatically, from around $3,500 for a 40HC from Ningbo to LA to $18-20k, but it has since stabilized to around $15k - and inflation is a rate of change, so in that area we are not seeing a continued paced increase in cost. It's just stayed expensive. Of course, energy and food matter, a lot. Food prices matter more than the price of, say, imported lawn chairs. But it's useful to ask why inflation is happening. Is it because our demand is too high and there's competition for resources? Then we need to slow down the economy to reduce competition for resources. That's the Fed's job. Or is it because there's a sudden reduction in available global oil and grain supply? Then it's not clear that causing a hard recession is going to fix it. In that case, we need to fix the decrease in supply. And in our current case, that's not easy: much of this increase is being driven by a misinformed dictator of a nuclear superpower hell-bent on escalating a regional war, and this type of problem is not one the Fed is well equipped to deal with. What we're really seeing is supply-side driven inflation. The Fed should continue to drive core inflation back down to its target level of 2-2.5%, but we are already seeing success here. The real question is what we do about energy and food, and it's not clear the Fed's actions are going to solve that problem.