The number of job openings in the U.S. remains very high.

According to BLS data released Tuesday, U.S. employers had 10.7 million job openings listed in September, an unexpected increase from the 10.3 million openings reported in August. However, it remains below the record high of 11.9 million openings in March.

This single metric helps explain everything that’s happening in the markets and the economy right now.

Why inflation is stubbornly high: A high level of job openings simultaneously reflects strong demand (Why would a business hire if they don’t have work that needs to be done?) and tight supply. (That business could be selling more stuff if they were fully staffed.) When supply isn’t keeping up with demand, you get inflation, as businesses are able to charge more for their limited supply of goods and services.

Why the Federal Reserve continues to tighten monetary policy: For a while, the Fed and many others argued that inflation would be transitory and that supply would eventually catch up with demand. But after many months, that didn’t happen, and inflation got hotter. In its effort to get inflation under control, the Fed has been going after demand by tightening monetary policy aggressively with the explicit intent of inflicting “pain” on the economy.

Fed Chair Jerome Powell has specifically argued that one of the key drivers of inflation was the fact that the demand for labor (job openings) has been much stronger than the supply of labor (unemployed people seeking work). As a result, businesses have been paying higher wages to recruit and retain workers. The bad news is that by putting more money in the pockets of workers, these workers are able to demand more goods even at higher prices. And so Powell is actively trying to close the gap between the number of job openings and unemployed people. As of September, there were 1.86 job openings per unemployed person.