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The Challenges of Achieving Lower Inflation
This chapter analyzes the difficulty of bringing inflation down to 2%, highlighting the importance of services in the CPI and the need for sub-trend growth. It discusses the impact of geopolitical factors like the situation in the Middle East on inflation forecasts and the potential for sustained significant increases in gasoline prices. The chapter also examines the state of the yield curve in the US and the Federal Reserve's actions, with a focus on the long end and concerns about fiscal policy and disorder.