The mood has shifted. Rates are finally moving down again. That change pulls markets toward a simple idea: inflation cools, the Fed relaxes, and life starts to feel normal.

But “normal” depends on which year you compare it to.

If your map is 2019, rate cuts look clean. Inflation was quiet, so the Fed could cut without much fear of prices re-heating. If your map is the mid-1970s or the mid-1990s, the story is tougher. In those periods, inflation did not fade just because people wanted it to. And policy stayed firm for longer than many hoped.

1974: Inflation as the setting. The oil shock of 1973–74 changed the price backdrop fast. The Federal Reserve’s history notes that the embargo and production cuts “altered the world price of oil.” In the data, you can see how rough that period was. The CPI index level rose from 46.2 in December 1973 to 51.9 in December 1974. That is not today’s world. But the lesson still lands: once inflation gets into big, daily costs, it can take time to work it out.

1994: A Fed that stayed ahead of inflation. From January 1994 to January 1995, the Fed raised rates seven times, from 3% to 6%. Many economists later viewed it as a “pre-emptive” tightening cycle. The key idea was not panic. It was a control. Policy stayed tight enough to keep inflation from taking root again.

2019: Cuts as insurance. In July 2019, the Fed lowered rates and pointed to global risks and “muted inflation pressures.” Later that year, Chair Powell explained the path in plain words: cuts in July, cuts in September, and “again today” in October. The point was support, not rescue. Inflation was not the main problem.

On December 10, 2025, the Fed cut the federal funds target range by a quarter point to 3.5%–3.75%. That is the kind of relief markets have been waiting for.

But the vote also showed stress inside the system. The Fed’s statement lists three “no” votes: one member wanted a bigger cut, and two wanted no cut at all. And the debate was not only at the top. Reuters reported that most regional Fed bank directors voted against changing the discount rate ahead of that meeting, even though the FOMC went ahead with the policy cut.

Inflation, meanwhile, is lower than its peak—but still present in the places that shape daily life.

The CPI report for November 2025 shows headline CPI up 2.7% over the prior 12 months, and core CPI up 2.6%. That is far from the 1970s. It is also not the calm, low-pressure world that made 2019 cuts feel easy.

The details explain why inflation can feel like it “won’t leave.” Over the same year, energy prices were up 4.2%, and the shelter index was up 3.0%. Those are large, steady bills. Even when the overall number improves, those categories keep the experience of inflation close at hand.

There is also a wrinkle in the data. The BLS notes it did not collect CPI survey data for October 2025 because of a lapse in appropriations, and collection resumed in mid-November. That does not erase the trend, but it highlights how uneven this period has been.

The Fed’s own language matches that caution. In Chair Powell’s December 2025 press conference, he said near-term risks to inflation were “tilted to the upside” while risks to employment were “to the downside.” That is not the tone of “mission accomplished.”

History does not hand us one ending. It hands us a range.

One path is the smooth one. Inflation keeps easing, big costs cool, and more cuts happen without re-starting the inflation story.

Another path is a smaller echo of the 1970s lesson. Inflation looks better for a while, then flares in key categories after a shock. The headline stays calm, but the lived costs stay noisy.

A third path rhymes with 1994. The Fed cuts some, then holds rates steady longer than markets want, trying to keep inflation expectations anchored.

None of these is a forecast. It is a way to keep the lens wide: cuts can arrive, and inflation can still shape the room.

Markets can price relief quickly. The economy usually resets more slowly.

The cut everyone wants is already here. The harder question is whether inflation is truly fading into the background—or simply getting quieter while it stays in the setting.

That is why today can feel like two eras at once: the 2019 hope for easy cuts, and the older memory that “higher for longer” can be more than a slogan. It can be the landscape you have to live in.