- Global inflation may drive US prices higher
- Inflation is relatively low
- The text of the speech is here. It’s pensive, theoretical and was given last week at a private conference but is only being released now:
Regarding this inflation puzzle, he noted that “one explanation could be that the output gap is not nearly as wide as commonly supposed.” On the other hand, “an alternative explanation is that the U.S. output gap is not the relevant output gap for U.S. inflation,” Bullard said, suggesting that perhaps the global output gap is what really matters. “The global output gap is probably much narrower or even positive; this would then be interpreted as putting upward pressure on U.S. inflation,” he added.
