I found this very interesting from a trader's comments on another website.
"I think it's VERY fair to judge the Fed on its past performance, but with that said, we should consider that the Fed has continued to say they are "data dependant" about rates going forward. What IF inflation cools off due to consumers becoming financially strapped? I felt like today's pop WAS the true and correct reaction to this week's inflation data. The drop in home prices and auto prices is exactly what the Fed has been waiting to see happen. IF the Democrats would stop pushing for every worker to demand more money it is highly likely we'd seen peak inflation. I think the data from this week's reports, and the data next month is going to allow the Fed to do nothing for the rest of the year. I also believe the post-Christmas quarter is going to show consumers really tightening their spending, further allowing the Fed to do nothing. IF the Fed has learned from its mistakes, as soon as it sees any sustained weakness in the economy it should start lowering rates .25% each meeting until they get down to 3%. A "soft landing" means you bring the plane in slowly, you don't wait until you hit the ground to deploy the landing gear. If there is any uptick in inflation along the way the Fed should use that moment to unload their balance sheet to cool things off tactically.
I've said it from the beginning, Congress and the politicians in DC are the issue. Interest rates aren't the cause of inflation, money flow is, and Congress controls the money flow in America. IF Congress stops borrowing money to juice the economy inflation would come to a halt almost overnight. The congressional budget for FY21 was $5.4 Trillion, FY22 was $6.3 Trillion, and FY23 is $5.5 Trillion. Inflation has literally followed congressional spending. Imagine IF Congress only spent $5 Trillion next year, cutting spending by another $500 Billion. US GDP for FY23 is an estimated $26 Trillion, so cutting $500 Billion from congressional spending is essentially removing 2% from US GDP."
