The Fed was always in a race: would price pressures recede before aggressive rate hikes started breaking key elements of the economy? Today provided tangible evidence that inflation might actually flinch first. Hope remains alive.

Admittedly, the PCE is still tracking up 5% a year . . . a lot hotter than the Fed’s goal of 3.3% by the time 2024 rolls around. But with nine months left in the year, prices are slowing at a rate that suggests that the Fed will actually be able to declare victory a little earlier than expected.

Under the right conditions, we get to 3.3% inflation by August and even 2% is in sight early next year. In that scenario, the Fed will have plenty of justification to leave interest rates exactly where they are.

We might even see rates start going down if it looks like the economy is straining too hard. That’s exactly what happened in 2018, when the Fed pivoted and started cutting to shelter the market from the impact of the trade war.

At the time, all it took was confirmation that inflation was dormant. We’re a long way from that point now, but at least the numbers are moving in the right direction.

And as you know, the numbers can be unpredictable. Wall Street seems to think that the Fed will have what it needs to actively start cutting rates as early as summer. Will that happen? Does that reflect a hard landing or severe recession?

We don’t know that yet. All we know is that the faster inflation gets back under control, the more liberty the Fed has to respond effectively to whatever happens in the economy.

Today’s number was the most bullish I’ve seen in months. Get in the game!