Federal Reserve executives — including Chairman Jerome Powell — are increasingly using a little-known price indicator as a reason to maintain confidence in their outlook, the “market-based” rate of inflation. This indicator does not include a range of services for which data collectors cannot directly measure prices and must make their own estimates. The inflation situation shown by this indicator in recent months is not the same. The basic inflation target valued by the central bank accelerated to 2.8% in November, and this market-based indicator has remained roughly around 2.4% since May. At a time when investors lower their expectations for the Federal Reserve to cut interest rates in 2025 and US Treasury yields are rising, these differences are significant. Although central bank officials have hinted that they will see the inflation rate move further towards the 2% target before reducing borrowing costs again, repeated approval of this alternative indicator may indicate that the threshold for further policy relaxation is even lower.