Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

Many of the factors that you’re citing as temporary on the downside regarding inflation we see as having been temporary on the upside regarding inflation as well. The higher energy prices and the pickup in import commodity prices were some factors explaining how we got above 2 percent, and their dissipation is principally the reason that we go back to 2. Now, for the extended Greenbook scenario that we show in the Bluebook, one reason for the upward pressure on inflation beyond the near term is that part of the construction of that forecast is an assumed 3 percent depreciation of the dollar that has to go on almost forever. So we have built in some upward pressure on inflation. We have to do that in the model simply to begin making some progress on the external balance. Whether that happens in 2009, in 2015, or tomorrow would be hard to say, but it is one reason that the pickup is not principally the dissipation of the temporarily good factors. It’s really more of that built-in dollar-depreciation effect.

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