Washington CNN  —  US inflation is down considerably from the 40-year highs reached in the summer of 2022. But it remains above the official 2% target set by the Federal Reserve. At their latest policy meeting earlier this month, officials revised up their economic projections for growth and inflation, while affirming their expectations of cutting interest rates this year. Some economists interpreted that as a sign that the Fed is now more tolerant of higher inflation. Central bankers repeatedly emphasize how important it is to get inflation under control, often mentioning the toll it takes on all Americans, especially those living paycheck to paycheck. After jacking up interest rates to a 23-year high, the Fed has made a lot of progress, but the final stretch is proving difficult, or “bumpy,” as Fed Chair Jerome Powell likes to describe it. Consumers prices were up 2.5% in February from a year earlier, according to the Fed’s favorite inflation gauge, which was released Friday. That’s a notch higher than January’s 2.4% annual rise and reflects Powell’s aforementioned bump. Powell pushed back on the perception that the central bank has grown more comfortable with inflation being higher for longer than expected in his post-meeting news conference. “No, it doesn’t mean that,” Powell said. “We did mark up our growth forecast, and so have many other forecasters, so the economy is performing well, and the inflation data came in a little bit higher as a separate matter and I think that caused people to write up their inflation [projections].” “We’re strongly committed to bringing inflation down to 2% over time,” Powell added. “Markets believe we will achieve that goal and they should believe that because that’s what will happen over time.” Powell continued to signal that “it will likely be appropriate to begin dialing back policy restraint at some point this year,” if the economy evolves as expected. Economist Mohamed El-Erian wrote in an opinion article in the Financial Times that the Fed was taking a risk by signaling it would cut rates even as it believes inflation could rise in the near term. “It is not often that you see a reputable central bank revise up its inflation and growth projections and yet strengthen a dovish tilt to its policy stance,” he said. Before the Bell spoke with Lydia Boussour, senior economist at EY-Parthenon, about the Fed’s perception of inflation. This interview has been edited for length and clarity. Lydia Boussour: The latest projections show that the Fed is willing to be a little bit more patient to achieve their goal. and my sense coming out of this month’s meeting was that Fed Chair Powell wants to get this easing cycle going sooner rather than later. They revised growth to show a stronger economy and they lifted inflation, too, but not as much. To me, that was a sign that they believe there’s more room for non-inflationary growth, so they’re just embracing this supply-side story that we’ve seen in the US economy. What’s allowing the Fed to be patient or more tolerant of higher inflation? They’re willing to essentially look through some of the bumpiness in the inflation data at the beginning of the year. We saw some stalling in January and February, but overall, the Fed believes that the disinflationary conditions that have been in place for some time will remain in place. We have this re-balancing in the labor market that’s ongoing, you’re seeing job growth remain solid, slower labor demand and a rebound in labor force participation. Companies are seeing less pricing power in this more fragile demand environment, and I think that’s important because consumers are still spending, but they’re being more cautious because of the fatigue that we’re seeing in the economy. Overall, their base case is that inflation is going to continue to move lower, and that sometime this year, they’re going to be able to start cutting rates. What’s helped drive this noninflationary growth that we may continue to see? What has surprised many is the fact that the supply side of the economy has responded more than anticipated. Supply-chain conditions have normalized significantly, and that helps keep goods inflation in check. The second factor is productivity growth, which I think is a really important piece of the inflation story because if companies are able to generate productivity gains, they’re not going to be so inclined to pass on higher costs on to the consumers. The third factor is the fact that we’ve seen a rebound in immigration and a rebound in the labor supply. That has helped loosen the labor market, which was very tight a few years ago, so all of these factors have really allowed for the economy to continue to move at a decent pace and that’s happening at the same time as inflation has been falling. What Home Depot’s $18 billion deal says about its strategy In its largest acquisition ever, Home Depot is expanding its business targeting professional contractors and builders as the home fixer-upper market stalls, my colleague Nathaniel Meyersohn reports. Home Depot announced Thursday that it is spending $18.3 billion to buy SRS Distribution, a huge building-projects supplier that counts professional roofers, landscapers and pool contractors as its primary customers. SRS, which will operate independently, Home Depot noted, has 760 warehouses and more than 4,000 trucks to deliver its goods. Home Depot, the nation’s fifth-largest retailer, currently gets around half of its sales from housing professionals, who spend more at stores than do-it-yourself homeowners purchasing lawn mowers and power tools. Both Home Depot and Lowe’s have been trying to win more pro customers. Read more here. Up Next Monday: S&P Global and the Institute for Supply Management release March surveys gauging economic activity in the US manufacturing sector. Tuesday: Earnings from Cal-Maine Foods and Dave & Buster’s Entertainment. The US Labor Department releases February data on job openings, hires, quits and layoffs. The US Commerce Department releases February data on new orders for manufactured goods. Wednesday: Earnings from Levi Strauss and Tupperware. The European Union’s statistics agency releases March inflation figures. ADP releases its March employment report. S&P Global and the Institute for Supply Management release March surveys gauging economic activity in the US services sector. Fed Chair Jerome Powell participates in a forum at Stanford University. Thursday: The US Commerce Department releases trade flow data for February. The US Labor Department reports the number of new applications for jobless benefits in the week ended March 30. Friday: The US Labor Department releases March data gauging the job market, including monthly payroll growth, wage gains and the unemployment rate.