This morning we got the CPI numbers for July, and they show that inflation is still quite low. Both the headline and core rate rose by 0.1% last month. In the last year, both headline and core are up 1.7%.
Here’s a look at the monthly seasonally-adjust core rates going back a few years:
The decline during March was a clear outlier but the four following months haven’t seen much an in uptick.
Here’s the real Fed funds rate based off core inflation:
I think this chart says a lot. You can see that even when the Fed does nothing, it’s tightening because inflation is getting softer.