Companies keep raising prices. The Fed is trying to get them to reconsider.

The Federal Reserve's inflation fight has run into an obstacle that monetary policy cannot directly control: corporate pricing decisions. Throughout this year, many businesses have found that consumers will absorb higher prices, allowing companies to pass rising costs—and in some cases, wider margins—along rather than sacrifice profit. That behavior helps explain why inflation has cooled only gradually despite the Fed's aggressive rate increases.

For markets, the dynamic matters because it shapes how long restrictive policy may need to last. If pricing power fades as demand softens, inflation could ease faster, giving the Fed room to loosen. If companies keep testing what consumers will pay, progress could stall, keeping rate-cut expectations in check.

What to watch: corporate earnings calls for signs of discounting or margin pressure, consumer spending data for cracks in demand, and the Fed's language on services inflation. These signals, rather than any single data point, will indicate whether pricing behavior is genuinely shifting.