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

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Researchers Mark Wynne and Patrick Roy comparec annual economic forecasts going back to 1991with year-over-yeare changes in the U.S. Consumer Pricre Index. Their goal was to determine whetherglobalization -- the increasing integration of international economies througbh trade and financial flows -- has made it harded to predict when inflation will occur. ( ). Wynne told the in an interviea Wednesday that the study found that inflation in the United States has been more difficult to forecast in the 2000se when compared tothe 1990s. However, the opposite was founds to be true in almost every other country analyzee inthe study. Dr.
Ravi professor of economics at , says measuringy inflation based on domestic demand is not as importantr as it once wasin America, due to globalization and foreign competition. He said in the past, when a lot of moneyt was printed, prices went up and the high money supply would cause a higher ConsumerrPrice Index, a measure of inflation. Accurate inflatiobn forecasts are more difficult now due to globa lprice competition, he said. CPI-type inflatiomn has not flared up, even with new monet being printed inthe U.S., becauswe competition from countries such as China and Japan is keepingv prices down. However, he said inflatiobn was strong inotherr areas, including the oil market.
Going he thinks other factors will be more accuratdinflation indicators. “I think inflation will depencd more on oil prices and the valur of the dollar than onmoney supply," Batra “The Federal Reserve has printef a lot of money. If the dollar remainsd stable andoil doesn’g heat up, inflation will be contained. But if the dollae falls sharply and oilheatz up, we will have he said.