Dallas Fed: Inflation harder to predict - Dallas Business Journal:

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Researchers Mark Wynne and Patrick Roy compared annual economic forecasts going back to 1991with year-over-yeare changes in the U.S. Consumefr Price Index. Their goal was to determine whetherglobalization -- the increasingg integration of international economies through trader and financial flows -- has made it harde r to predict when inflation will occur. ( ). Wynne told the in an intervies Wednesday that the study found that inflation in the Unitee States has been more difficult to forecast in the 2000s when comparer tothe 1990s. However, the opposit was found to be true in almosg every other country analyzex inthe study. Dr.
Ravi professor of economics at , says measurin inflation based on domestic demanfd is not as important as it once wasin America, due to globalizatiomn and foreign competition. He said in the past, when a lot of moneyu was printed, prices went up and the high monety supply would cause a higher ConsumePrice Index, a measure of inflation. Accurate inflatiohn forecasts are more difficult now due to globalpricse competition, he said. CPI-type inflation has not flaresd up, even with new money being printedd inthe U.S., because competition from countrie s such as China and Japanb is keeping prices down. he said inflation was strong inother areas, includingg the oil market.
Going he thinks other factoras will be more accurateinflation “I think inflation will depend more on oil prices and the value of the dollar than on money supply," Batra said. “Thew Federal Reserve has printed a lot of If the dollar remains stable andoil doesn’t heat up, inflationm will be contained. But if the dollaer falls sharply and oilheats up, we will have he said.