Inflation’s Back In America. Not That It Ever Left

•February 20, 2026

Heisenberg Report•Feb 20, 2026

Why It Matters

Persistent inflation forces the Fed to keep rates higher longer, tightening financial conditions for businesses and consumers. The outlook reshapes investment strategies and corporate budgeting across the economy.

Key Takeaways

•Fed minutes reveal persistent price pressures.
•Core CPI up 0.3% month‑over‑month.
•Real wages still lagging behind inflation.
•Policy rate likely to stay elevated longer.
•Bond yields rise as investors price tighter policy.

Pulse Analysis

The latest Federal Reserve minutes paint a stark picture of inflation’s resilience in the United States. While headline numbers have softened in recent months, core CPI’s steady month‑over‑month gains and wage growth that fails to keep pace signal that price pressures are far from resolved. Policymakers highlighted supply‑chain bottlenecks, elevated energy costs, and robust consumer demand as key drivers, underscoring why the Fed remains cautious about declaring a definitive victory over inflation.

For monetary policymakers, the minutes translate into a longer‑than‑expected period of restrictive policy. With the benchmark rate already in the 5.25‑5.50% range, the Fed is unlikely to pivot toward cuts until inflation consistently breaches the 2% target. This stance influences forward guidance, bond market expectations, and the pricing of risk across credit markets. Moreover, the central bank’s acknowledgment of “sticky” core inflation may prompt a reevaluation of balance‑sheet normalization timelines, adding another layer of uncertainty for lenders and borrowers alike.

Market participants are already adjusting to the new reality. Treasury yields have risen as investors price in a higher‑for‑longer rate environment, while equity valuations in rate‑sensitive sectors such as technology and real estate face downward pressure. Corporations, in turn, are revising cost‑of‑capital assumptions and accelerating price adjustments to protect margins. Consumers may feel the pinch through higher borrowing costs and slower wage growth, potentially dampening discretionary spending. In sum, the Fed’s minutes signal that inflation’s return is more a continuation than a surprise, shaping policy, markets, and everyday economic activity for months ahead.