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

The persistence of inflation this year reflects more than just rising input costs. Businesses have found that consumers will largely absorb higher prices, giving companies leeway to protect margins by passing costs along. That dynamic has complicated the Federal Reserve's efforts to bring inflation back toward its 2% target.

Policymakers are now signaling that they want firms to reconsider that pricing strategy. The concern is a self-reinforcing cycle: when businesses expect costs to keep rising, they raise prices preemptively, and those expectations can become embedded. Economists watch this through measures like the employment cost index and surveys of firms' pricing plans.

What to watch: whether corporate pricing power starts to fade as consumers trade down or push back. A slowdown in price increases would ease pressure on the Fed and could influence the path of interest rates. If firms keep raising prices, the central bank may need to keep policy tighter for longer.