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

The Federal Reserve's fight against inflation has run into a stubborn dynamic: many companies have continued raising prices, and consumers have largely absorbed them. That pricing power matters because it helps explain why inflation pressures have remained persistent this year, even as the Fed has kept interest rates elevated.

When businesses can pass higher costs along to customers without losing much demand, price increases tend to stick — and can feed expectations that inflation will stay higher for longer. That complicates the Fed's job, since its tools work mainly through demand, not directly through corporate pricing decisions. The central bank's aim is to cool that behavior by keeping borrowing costs high enough to soften spending.

For markets, the key question is whether pricing power starts to fade. Watch upcoming inflation reports, corporate earnings commentary on pricing and volumes, and any signs that consumers are pushing back or trading down. Those signals will shape how long the Fed feels it needs to keep policy restrictive.