Something rare is on the verge of occurring in the US economy: The gap between the US unemployment rate and headline CPI has narrowed to just 0.1 percentage points, the smallest since 2022. This comes as inflation rose to 4.2% in May, the highest since April 2023, while the unemployment rate stood at 4.3% in March, April, and May. Historically, periods when this gap has approached zero have often been followed by Fed rate hikes. The most recent example includes 2021-2022, when inflation exceeded the unemployment rate for 22 months. This prompted the Fed to hike rates by 5.25 percentage points to 5.5% between March 2022 and July 2023, the highest since 2001. Inflation is back at the center of the Fed's attention.