U.S. News -- CAPITAL: Crises Scramble Fed's Inflation Calculus
The word on inflation according to the Federal Reserve before the Middle East blew up and Japan was shaken up: Relax.</br></br>With so many people out of work and so many factories, offices and malls empty, few workers can get big wage increases and few companies can make price increases stick.</br></br>Yes, food prices are up, but nothing we do will make the sun shine or the rains come at the right time to grow more crops. Yes, commodity prices are rising, but that's because demand from emerging markets is strong. Yes, we are still pumping billions into credit markets, but we'll drain that money before it fuels inflation. And, please, don't blame us for inflation in China or India -- or the U.K. Fighting inflation there is a job for their fiscal, monetary and exchange-rate policies, not us.</br></br>So, as long as all of you believe that we at the Fed won't let inflation climb much, and act accordingly, it won't.</br></br>Then came Tunisia, Egypt and Libya. The Brent benchmark price of oil went from $90 a barrel in December to $115.