As Inflation Cools, Debate Continues Over What Drove Price Drop
• As inflation cools, Team Transitory claims victory, though the debate continues over whether supply chain improvements or Fed policy drove disinflation
• Team Transitory argues immaculate disinflation occurred without significant job losses, contrary to some predictions
• However, Fed tightening clearly slowed demand-sensitive sectors, suggesting it played a key role
• About half of inflation was transitory per supply chain improvements, but Fed should have tightened policy sooner
• Though Team Transitory was right on inflation's temporary nature, Team Persistent was right on necessary Fed response