The latest inflation figures are expected from the US Bureau of Labor Statistics on Tuesday morning. For the month of January, analysts forecast that consumer prices increased by 6.2% year-on-year, which would mean a slowdown compared to the 6.5% observed in December.

Economists increasingly believe that inflation has already peaked. But 6.2% is still well above the 2% the Federal Reserve wants, given its mandate to promote stable prices and a low unemployment rate.

It’s one of the reasons Fed Chairman Jerome Powell told an audience last week that he intends to keep interest rates higher for longer, until inflation gets closer to that target of the year. 2%. By keeping those bloated interest rates, Powell hopes to increase the cost of borrowing and investing, thereby reducing overall demand in the economy and putting downward pressure on prices.

Meanwhile, the Fed will make everything more expensive, from buying a house or a car to borrowing with a credit card or a personal loan.

There was no big slowdown in prices in January, according to Ian Shepherdson, chief economist at research group Pantheon Macroeconomics. In a note to clients Monday, Shepherdson said the recovery in gasoline prices and continued rent increases kept overall prices higher last month. A sudden, albeit modest, rise in used car prices, in contrast to recent sharp declines in that market, also pushed costs up.

That means the Fed and Powell are likely to keep raising rates, he said.

«We now expect a further increase in March, and are increasingly inclined to expect a final increase in May,» Shepherdson wrote.

The US economy is proving difficult to slow down, Bank of America economists said in a note last week, citing the extraordinary 517,000 job creations in January. That means any next recession is likely to be mild and not occur until the second half of 2023, they suggested.

Still, there is evidence that the economy is slowing. On Monday, the New York Federal Reserve reported that average expected growth in household income fell from 4.6% to 3.3%. That’s the biggest one-month drop in the survey’s nearly 10-year history.

In other words, American households aren’t just expecting a slowdown in income; they also expect the slowdown to be quite large.

And after seeing an increase in January, gas prices have already changed course and now they are almost $0.06 lower than a week ago.

But those changes were not going to be reflected in the January price data. And it is not clear if they mark the start of a new trend.

So the Federal Reserve will hold those interest rates a little bit longer.

«There was an expectation that [inflation] it will go away quickly and painlessly, and I don’t think that’s guaranteed at all; that’s not the base case,” Powell said last week.

“The base case for me is that it will take some time, and we will have to do more rate increases, and then we will have to look around and see if we have done enough.”