We last wrote about the inflation outlook in the September 24, 2012 edition of the Weekly Economic Commentary: The Inflation Situation. Since then, while inflation and inflation expectations in the United States have remained in check, the Federal Reserve (Fed) has begun another round of bond purchases, known as quantitative easing (QE). This decision — along with the recent run-up in consumer gasoline prices and recent comments from some members of the Federal Open Market Committee (FOMC) that the costs of QE may soon…

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The Inflation Situation Revisited