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

If I could just comment on the worldwide aspect of your point, I’d say that the one piece that’s missing is that globally we have not seen this inflation pressure translate into an acceleration in wages and labor compensation—not so much here in the United States and not in rest of the world. Even in places where central banks are tightening monetary policy in recognition of the inflation that they are experiencing in their consumer prices, one is not hearing stories about an acceleration of wages.

So there’s truth in everything you’ve said, and I wouldn’t disagree that it’s worrisome, but we’ve seen huge changes in the structure of global economic activity. Those changes may have effected significant changes in relative prices, particularly of energy on the one hand and of other kinds of primary commodities on the other. We keep saying that those price changes are going to end, right? Every FOMC I come here, and I tell you that those prices are flattening out starting this morning. [Laughter] Then I come back six weeks later, and I say it again—and that’s not lost on me.

However, there is a question in my mind as to trend versus relative price effects here, and I think there are surely some of both types of effects. It may be wrong to attribute the pressure entirely to a relative price shock that’s going to go away immediately, but it’s certainly also wrong to call it all inflation trend with no relative price component.

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