If you're like most thoughtful investors, you've probably asked this question at least once over the past year: Are we finally done with inflation, or is it just hiding out for a while? 

We’ve seen inflation cool from the blistering 9 percent highs of 2022 to a more digestible 2.3 percent today. The Fed’s tough love — higher interest rates and tighter money — has worked its way through the system. And for the first time in a long time, all points on the interest rate curve are above the inflation rate. That’s progress. 

But here’s the twist: just because inflation has calmed down doesn’t mean it’s gone for good. Let’s break down what’s really going on, what’s driving inflation, where we stand now, and why the Fed’s next move matters more than most headlines suggest. 

The Real Story Behind Inflation’s Rise and Fall 

During the 2008 financial crisis, many feared that printing money (also known as Quantitative Easing) would send inflation skyrocketing. It didn’t. Why? Because banks weren’t lending. It was like filling a gas tank with the parking brake on. M2, the broad measure of money supply, grew at a steady pace, and inflation stayed tame. 

But the COVID era was a whole different playbook. This time, the Fed loosened banking regulations and the Treasury pumped stimulus directly into households and businesses. PPP loans, tax rebates, and expanded unemployment benefits all hit the system fast, and money moved. M2 exploded. And right on cue, inflation followed. 

That 9 percent CPI number in 2022? It wasn’t a mystery. It was the predictable outcome of too much money chasing too few goods. 

What’s Happening Now? 

M2 has flatlined. It’s barely above 2022 levels, and its recent growth is modest — up 4.4 percent year over year and running at about a 6.5 percent annualized pace over the past three months. That’s not nothing, but it’s a far cry from the pandemic surge. 

Meanwhile, real interest rates (adjusted for inflation) have held steady around 2 percent. That’s the tightest monetary stance we’ve seen since before the Great Recession. And it’s doing its job. Core inflation has dropped from 6.6 percent to 2.8 percent. Even the “supercore” measure, which excludes goods, energy, and housing, is trending in the right direction. 

Put simply, the Fed has been holding the reins tightly. And the horse has slowed down. 

Why Inflation Could Sneak Back 

But here’s where we urge caution. If the Fed cuts rates too quickly, or if M2 starts to grow again meaningfully, we could see inflation flicker back to life. Not as a raging wildfire, but as a steady, smoldering ember. Still enough to cause problems. 

There’s also the temptation to blame other factors like tariffs for inflationary pressure. While tariffs can push up prices on certain goods, they don’t typically create broad-based inflation. They’re more of a reshuffling of consumer dollars than a true increase in overall prices. 

It’s the money supply — the fuel in the engine — that really drives inflation. 

So, What Should Investors Do Now? 

This is where calm, long-term perspective pays off. 

At SteelPeak, we don’t build portfolios or make life decisions based on today’s headlines. We focus on aligning your wealth with your values and goals, and we stay disciplined through cycles like these. 

If inflation remains contained and the Fed begins to lower rates gradually, we could see a supportive environment for equities and long-term bonds. If inflation rears up again, certain asset classes like real assets or inflation-linked securities may play a larger role. 

Either way, the answer isn’t to guess what’s next. It’s to be ready for whatever comes. 

What We’re Watching and Why It Matters to You 

We’re keeping a close eye on: 

• M2 growth. Still the most important leading indicator of inflation 
• Fed policy. Cuts may be warranted, but timing is key 
• Core and supercore inflation. The best gauge of underlying pressure 
• Global factors. Tariffs and geopolitics matter, but they’re not the main story 

It’s easy to get caught up in the noise. But the real power comes from clarity and preparation. If inflation stays low, your financial plan should reflect that. If it ticks up again, we’ll be ready to adjust. 

Either way, you don’t need to navigate this alone. 

The Bottom Line 

Inflation has cooled, yes. But it hasn’t vanished. 

Think of it like a brushfire that’s mostly burned out but still smolders underground. If the Fed acts too fast, or if we forget the lessons of 2020 and 2021, that fire could flare up again. 

The good news? You don’t need to panic. You just need a plan that’s built to flex, adapt, and grow with you — regardless of the next headline. 

At SteelPeak, we help families take the long view. Inflation, like every other economic force, is something to understand and plan around, not fear. 

Ready to talk about how inflation (or interest rates, or anything else on your mind) fits into your bigger picture? Let’s have that conversation.