The Fed for sure wants it at 2%, not 2.5% , not 1.7%...
The Fed will be raising rates. The question is how far they have to go before inflation subsides, but it is monumentally obvious that long-term interest rates have to lift off. The days of zero-interest overnight rates are over.
https://en.wikipedia.org/wiki/Taylor_rule
Problem is that it's very likely that the Fed can't raise rates to 13% without very serious negative consequences like the government defaulting and the people revolting. My prediction is that they get to 3-4%, the economy breaks, and then they flinch and drop to 0 again. Meanwhile, inflation will continue to accelerate, as real interest rates remain negative.
When the currency has depreciated by a factor of 5 or so, total debt levels will become manageable again, and then we might see the Fed persistently raise rates to 20-25% and choke off the inflation. At 20% inflation, it'll take about 9 years to get there, at 8% more than 20 years. If inflation gets to 20% it's very likely to get past 20%, though.
This was a major factor in the tech story. Rather than valuation being focused on current profits, as is the case for most industrial stocks, valuation for tech is based on expectations of future profits, i.e. growth. When long term interest rates are very low, these future cash flows are not discounted very much. Therefore, good growth numbers for tech in a low interest rate environment resulted in face-melting performance as all of that expected future profit is basically just assigned to the current value of the equity.
That era is clearly ending. Long term interest rates hit the all time low and are rebounding in a way that is very distinct from 2009. I would not be surprised if tech stocks fundamentally reprice and never completely recover.
Zoom out here:
https://fred.stlouisfed.org/series/DGS10