I think the fed, and the market, are basically under the belief that inflation isn't going to sustain at above 2% for long.
I mean, look at it from their side. They've been doing everything they can think of to hit 2% for a decade without success. Now, after the pandemic everyone is rushing back to work on a massive scale never seen before (plus some fiscal spending with additional unemployment benefits are still out there) and inflation is what, maybe 3% over two years if you are super generous with the numbers.
They are basically just in "wait and see" mode to know if this inflation trajectory has staying power.
I mean, look at it from their side. They've been doing everything they can think of to hit 2% for a decade without success. Now, after the pandemic everyone is rushing back to work on a massive scale never seen before (plus some fiscal spending with additional unemployment benefits are still out there) and inflation is what, maybe 3% over two years if you are super generous with the numbers.
They are basically just in "wait and see" mode to know if this inflation trajectory has staying power.