Developments in the U.S. economy have recently been going the Federal Reserve’s way, with price pressures peaking even as economic growth and strong payroll gains have been sustained. But don’t be fooled: The task of getting inflation back to the Fed’s 2% target remains extremely daunting, both practically and politically.

Economic indicators—including the employment report for June, industrial production, and the Institute for Supply Management’s activity indices—suggest that growth has slowed but the economy is not in recession. Meanwhile, energy prices have fallen, core inflation is decelerating, wage inflation might be declining and longer-term inflation expectations remain well-anchored. To some, this might look like the beginning of a soft landing and a potential triumph for the Fed.

Far from it. For one, the Fed hasn’t made much progress in curbing the excessive demand for workers. Despite months of large employment gains, the ratio of job openings to unemployed workers remains at 1.9, nearly twice the level Fed Chair Jerome Powell has indicated as desirable. To get inflation back to 2%, the central bank will have to push the unemployment rate up significantly from the current 3.6%. Even an 0.5-percentage-point increase would probably mean a recession, because that’s what has always happened in the past when the unemployment rate has breached that threshold.

Second, the Fed needs to be confident that it has succeeded in pushing inflation back down on a sustainable basis. Chair Powell correctly understands that the costs of not hitting the 2% target over the next year or two outweigh the costs of a mild recession—because failure would cause inflation expectations to rise, necessitating an even tighter monetary policy and a deeper downturn later. In the late 1960s and the 1970s, the central bank tightened monetary policy enough to push inflation lower at times, but it reversed course too soon. As a result, the peaks and the troughs for inflation kept moving higher—until the 1980s, when Paul Volcker had to force a deep recession to regain control. Given this history, officials will be hesitant to stop tightening until they’re highly confident (probability greater than 80%) that they’ve done enough—that the labor market has sufficient slack to keep inflation low and stable, and that easing financial conditions won’t lead to a inflation rebound.

Third, tightening will create political challenges for the Fed. Aside from the pain of job losses and economic contraction, higher interest rates will generate operating losses for the Fed, as the interest it pays on bank reserves far exceeds the return on its holdings of Treasury and mortgage securities. The central bank’s own estimates suggest that it will start losing money in the fourth quarter of this year, and post large losses in 2023 if interest rates evolve in a way close to what they and markets expect. Fed losses, which will be at the taxpayers’ expense, could embolden opponents of quantitative easing to argue that the Fed has breached the boundary between monetary policy and fiscal policy. Congress could even seek to take the tool away, undermining the Fed’s ability to provide further monetary stimulus the next time that short-term interest rates reach the zero lower bound.

Beyond that, operating losses could make the Fed reluctant to sell mortgage-backed securities, despite its commitment to eventually return to an all-Treasuries portfolio. Such sales would realize losses on the securities, which have declined considerably in price as interest rates have risen.

All told, the Fed still has an extraordinarily difficult path to navigate and a long way to go.

Bill Dudley, a Bloomberg Opinion columnist and senior adviser to Bloomberg Economics, is a senior research scholar at Princeton University’s Center for Economic Policy Studies. He served as president of the Federal Reserve Bank of New York from 2009 to 2018, and as vice chairman of the Federal Open Market Committee. He was previously chief U.S. economist at Goldman Sachs.