A 6.2% surge in consumer prices rattled everyone from economists to investors to policymakers in October, and while some of it can be attributed to supply chain bottlenecks, 1-1.5% of the core CPI is made up of transitory inflation components, which doesn’t include food or energy—meaning sticky inflation has been running well above the Fed’s 2% target, reports an article in Barron’s.

The twist is that the Fed has known for a while that inflation isn’t transitory, because their metric—the underlying inflation gauge or UIG—has been skyrocketing since early this year and is currently at its record high of 4.3%. The UIG is published monthly but compiled daily so it monitors these changes very closely. Looking at the UIG over the past decade, there actually isn’t a long period of under 2% inflation at all, the article contends.

So while there’s an expectation that the Fed will lift interest rates soon, as well as speed up the tapering of its monthly emergency bond purchases, it’s likely that the Fed will continue to wait in hopes that it will increase the likelihood that money velocity will rebound to its pre-pandemic levels. However, if the Fed has waited to long too taper, it may have to chase inflation more aggressively than they planned, raising rates 3 times in 2022, and 5 times in 2023, in hopes of cooling inflation.