Inflation isn't falling fast enough, otherwise recent dips in PCE and CPI would be larger. The oil price collapse and soon-to-be-rally above $80 will put pressure on Central Banks to avoid pausing their rate hikes. Unemployment is starting to trend higher in 2023.

 

I would argue, despite inflation cooling (somewhat) it should be a lot lower due to the 2022 end year oil price, prior to the recent spike.  Which is probably indicative that interest rates are still too low to have a significant impact on inflation.   This tentative approach by global Central banks could be in lieu of the recent bond implosion by banks that have somehow been unable to recalibrate risk with higher interest rates.  Assumptions of a recession in 2023 aside, the real and persisting threat to the American economy is stagflation.

Please refer to the chart above with CPI (Consumer Price Index), PCE (Personal Consumption Index) for February 2023, interest rates (bar chart) and oil price (1/4/2023 close).  As you can see oil decoupled from the CPI and PCE inflation gauges in May 2022 when President Biden announced the Strategic Petroleum Reserve drawdown at 30 million barrels a mouth, the impart on the CPI and PCE should have been greater, considering the correction with energy inflation and the inflation in general.   Yet, it is interest rates that seem to have had very little impact on the CPI and PCE, note that both gauges sit within the rate range of 4.75%.

This indicates imbedded inflation which has detached form energy inflation, a worrying trend that aspects of inflation are now showing up in 'everything' rather than just the basis of core inflation.    

The recent bank crisis that was not a banking crisis, has created more uncertainly than not with the Federal Reserve adding deprecating bank assets to their balance sheet, which is essentially printing money, they, the Fed may offer a pause in rates at their next meeting.

All eyes on oil price moving close to 100 a barrel and unemployment, with 2023 layoffs picking up speed.