Flashback to June 2008 (only three short years ago):
Headline CPI was running very close to 5.0 percent. The Fed funds rate was at 2.0 percent. Brent crude was $132/barrel. The Fed’s June 2008 minutes mentioned the word “inflation” 110 times (“deflation” and “disinflation” combined: zero), and also contained this caveat (emphasis mine):
With increased upside risks to inflation and inflation expectations, members believed that the next change in the stance of policy could well be an increase in the funds rate; indeed, one member thought that policy should be firmed at this meeting.
And CNBC reported (in May) that: “One-year inflation expectations surged to 5.2 percent — their highest since February 1982 — from 4.8 percent in April.”
Fast forward one year:
Headline CPI was -1.2 percent (so much for the public’s ability to foretell inflation trends, but who didn’t know that?). The Fed funds rate had been lowered to its current range of 0.00 – 0.25 percent. Brent crude was $69/barrel. The Fed minutes were, amazingly, discussing “reduced concerns about deflation.”
Bernanke’s prepared remarks and Q&A on Wednesday mentioned the word “inflation” 82 times. (The word “deflation”: twice.) It is unfortunate that “inflation” was far and away the dominant theme on Wednesday, swamping “jobs,” “employment,” and “unemployment” which, in my opinion, should have been the focus.
Of course, no two business cycles or economic environments are exactly the same, but as I pointed out recently here, it is unlikely that we will enter a period of sustained high inflation absent a more taut labor market, and that, unfortunately, still seems a ways off.
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.