Inflation is stuck above 2%. Can the Fed really do anything about it?

The U.S. Department of Commerce released the July personal consumption expenditures price index on Wednesday morning. PCE is the Federal Reserve’s preferred measure of inflation, and it is still stuck above the Fed’s 2% target. It has been for more than five years now.

But can the Fed actually do anything about the type of inflation facing the country right now?

Wednesday’s report showed that core PCE — which strips out volatile food and energy prices — grew 3.3% in July.

But the inflation that plagues the country is caused by things out side of the Fed’s control.

“They cannot influence the war in Iran,” said Danielle DiMartino Booth, founder and CEO of Q1 Research. “They cannot influence what’s happening in the Strait of Hormuz. They cannot influence commodity prices. And they cannot influence prices that are driven upwards by tariffs.”

DiMartino Booth said it’s not like the Fed can pump more oil or do away with President Donald Trump’s new tariffs.

“It’s a supply chain-driven situation that the Fed cannot influence,” she said.

Fed officials’ tools can only fix the economy when demand is the problem: They can raise interest rates to make borrowing more expensive, dampen demand, and cool off the economy.

That tactic would not be effective now.

Still, Fed Chair Kevin Warsh keeps insisting inflation will get back to the Fed’s target of 2%.

At this point, “The Fed can only hope that they can talk this inflation down,” said Olu Sonola, U.S. head of economics at Fisch Research. ”They can signal this inflation down. But they also recognize that the tool they have is quite blunt.”

And the worst part is that Fed officials don’t know how long they’ll be in this pickle.

“I see the Fed as being in a really tough spot right now,” said Gary Hoover, an economics professor at Tulane University .

Hoover said the Fed works best when it knows what to expect next. But it doesn’t always.

“The on-again, off-again nature of some of the issues that the Fed is facing leaves them really conflicted and not certain on how to proceed.”

Hoover says the last thing Fed officials want is to do is to change interest rates, then realize that — oops — they need to hit reverse.