So far, the actual growth in the price level has been temporary. Expectations of inflation remain muted because either the anticipated output gap or the responsiveness of inflation to the output gap are thought to be small, inflation expectations remain well-anchored, or all three.
Menzie Chinn is a professor of public affairs and economics at the Robert M. La Follette School of Public Affairs at the University of Wisconsin-Madison. His research examines the empirical and policy aspects of macroeconomic interactions between countries.