They’re trying not to overshoot on the high side with rates and start a more significant recession. A mild recession with some job losses is not going to make the Fed start dropping their rate unless inflation is close to their 2.5% target.
I was surprised to see the inflation number last month remaining stubbornly high, and I would guess that might continue for a while. That said, I see the primary drivers of inflation as being close to, if not completely under control (insofar as that is possible) for a while.
The housing market has cooled, in some areas quite dramatically. They are talking about a rollback in housing pricing in parts of Canada, perhaps as severe as 25%. Flippers are getting out, and investors are exiting as interest rates make their properties unprofitable. In some cases their short term roll-overs are being called:
Toronto Home Prices Drop 16% in Historic Five-Month Slump
https://www.bloomberg.com/news/articles/2022-09-02/toronto-h…
Housing Prices Grind Lower in Canada, Aiding Fight Against Inflation
https://www.bloomberg.com/news/articles/2022-09-15/home-pric…
Gas prices are coming down all over the country, going on six or seven months now. There are wage increases to come as workers try to “catch up”, but it seems that should be a short lived phenomenon. Food prices may still be under pressure thanks o drought and the ever-never-ever-ending transport problems but hopefully that will get straightened out soon enough (of course I thought the same thing six months ago.)
As for the “stag” part, note that the US will likely outgrow China this year for the first time in almost 50 years.
US Growth Seen Outpacing China’s for First Time Since 1976
https://www.bloomberg.com/news/articles/2022-05-20/us-growth…
I’ll go out on a limb here and predict the inflation number starts to recede with the next report. At least I’m hoping, so the Fed doesn’t get scared and overreact and send us into a real recession.