The Federal Reserve is planning on keeping rates higher for longer in its bid to bring inflation down to its 2% target.

Dreyfus and Mellon Chief Economist Vincent Reinhart and Stifel Chief Economist Lindsey Piegza join Yahoo Finance Live to discuss the Fed's efforts to reign in inflation.

“I don’t want the committee to prematurely declare victory before we get to that 2%,” notes Piegza who insists that price stability is key. Reinhart states “the grade is incomplete” because though inflation has been brought down "considerably" it is still not at the Fed's 2% target.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

SEANA SMITH: Lindsey, let me start with you just in terms of how successful the Fed has been in trying to address what has been-- what has proven to be very sticky inflation? What grade would you give the Fed?

LINDSEY PIEGZA: I would give the Fed a B right now because we still have a lot of unfinished business. Inflation has come off of peak levels, but we're not at 2% yet. 3 and 1/2%, 4%, that's not 2%.

And the last 100, 200 basis points is always the most difficult. So my concern is while the Fed has done a good job opening up the table of potential policy moves to include rate cuts should inflation continue, I don't want the committee to prematurely declare victory before we get to that 2% So we can't just hope inflation continues to recede, we need to ensure a return to price stability.

BRAD SMITH: So Vincent, too early to declare victory, but it seems like at least, and this is good for consumers and perhaps for the economy as well, that the Fed is at least winning the battle against inflation.

VINCENT REINHART: So the grade is incomplete because they're not at their goal of price stability of 2%. Certainly the case. I think the key feature of 2023 about disinflation is it was actually a lot easier than they thought.

Jay Powell admitted it at his press conference after this FOMC meeting. They went into it thinking it was going to be hard. Just listen to the succession of two Jackson Hole speeches he gave.

And in fact, the unemployment rate is still below their estimate of the natural rate. Aggregate demand still has considerable momentum. So they got inflation down considerably without nearly as much pain as they thought. But they're not done and the risk is the pains to come.