On Jun 16, 2006, at 12:38 PM, Michael Pollak quoted Paul Krugman:
> Fed officials now seem worried that we may be seeing the start of
> another round of self-sustaining inflation. But is that a realistic
> fear? Only if you think we can have a wage-price spiral without,
> you
> know, the wages part.
This is true for hourly workers, but there's been a considerable pickup in wage growth at the high end. Skilled workers, say employers, are in short supply, and their pay is getting bid up. It's a bifurcated labor market.
Another wrinkle: the line after the 1979 oil shock was that the Fed would never again indulge sharp rises in energy prices. The way to bring down oil prices is to engineer a recession. They never hint at this publicly, much less mention it explicitly, but it's possible they also want to nip the commodity price spike in the bud.
That said, Bernanke keeps changing his story every day, even when he's not in the presence of the destabilizing Maria Bartiromo.
Doug