Inflation is predictably bad. That's progress.

Wall Street is getting increasingly confident that it has figured out inflation. Prices are still rising quickly, but the phenomenon has become predictable and — for investors at least — has started to fade into the background. That's appropriate, as long as it doesn't engender complacency.

Consider the latest consumer price index report. The Bureau of Labor Statistics reported on Wednesday that core consumer prices — which exclude volatile food and energy — rose 0.4% in April from the previous month, an increase that would have shocked markets before the pandemic. From 1993 to 2019, inflation hit that mark only seven times and never exceeded it. On a three-month annualized basis, the inflation rate is still running around 5.1%, far above the Federal Reserve's objective. Yet the market has become numb to such numbers: Yields on two-year Treasury notes actually fell nine basis points to 3.93% after the report.

In a sense, that's understandable. Inflation has become a "known known" — a thorn in everyone's sides that has ceased to surprise anyone. In its place, the economic landscape is now littered with new risks that are still much less understood, including the threat of more regional banks buckling, the uncertain future of commercial real estate and the possibility that a political game of chicken involving the debt ceiling could lead to a default.

Traders are just happy that inflation has ceased to surprise them. It's no longer delivering the shocks that it did over the past two years. The median prediction in Bloomberg's survey of economists has accurately projected four of the last six core CPI numbers, and the other two were off by small margins. Inflation is clearly a net negative overall, but unpredictable inflation is much worse than the predictable kind. It's the surprise inflation that makes business decisions chaotic and keeps consumers off balance. And there's clearly much less of that.

Of course, it would be a mistake to start ignoring inflation completely; it's not worsening, but it's not truly getting better, either. Indeed, the latest numbers show that consumer prices are behaving something like a game of whack-a-mole, where improvement in one category gives way to concern elsewhere.

Core services excluding housing — a sticky category that Fed Chair Jerome Powell has focused on relentlessly in recent months — moderated to just a 0.1% increase last month, bringing the three-month annualized rate to about 4.1% (from 5.2% in March.) But no sooner had that key category cooled that core goods — another key category that includes automobiles — accelerated to 0.6% month-on-month, the fastest since May 2022.

For now, the Fed made the right decision this month in raising the fed funds target range to 5% to 5.25% and subtly signaling a willingness to pause further increases at its next meeting. With inflation proving more predictable and uncertainty about other risks mounting, prudent policymaking means exercising patience as events unfold. The central bank will get another CPI report before it makes its next decision on June 14, but it would have to be shockingly bad to spur them into further action.

But Powell has made clear that he's committed to the Fed's 2% inflation target. If progress on inflation stalls and the U.S. avoids a recession, the policy rate will have to go even higher, which would hurt homebuyers and consumers, upend bond and stock markets and further raise the odds of a recession. For now, it's acceptable to relegate inflation to the background among serious market risks. Just don't forget it's there, because it may yet shove its way to the foreground again.