On April 20th it dropped its own commitment to keeping its short-term rate at 0.25% until the second half of this year, citing stronger growth and firmer inflation than expected.
The Fed has a firm 2percentt inflation target, Bivens observed, but the criteria it uses to measure full employment are "not very firm".
If workers and firms expect inflation to increase, they seek higher wages and prices in anticipation.
And high capital investment may itself have changed the traditional relationship between unemployment, the physical capacity of firms, and inflation.
As these steps lift pay and firms' costs, inflation should follow.But even if it is short-lived, this sort of deflation can dull an economy.
Yet little is known about what firms expect inflation to be and how, if at all, these beliefs influence pricing decisions.If an inflation psychology is returning, not all the rich world's central bankers appear to be treating it with the same degree of fear.
All this, it is feared, will dent the profits of big oil and mining firms, stoke inflation and imperil the West's access to resources that it needs just as much as China does.Diplomats and pundits, for their part, fear that the West is "losing" Africa and other resource-rich regions.
He was particularly prone to quick-fix solutions in economic policy, resorting to regular currency devaluations, expropriations of private firms and inflation-busting public-sector pay rises rather than tackling the economy's underlying structural problems.
To maintain their new-found strength, their policymakers need to keep a firm grip on inflation.
"We don't want to kill an already weak economy, but we want to make sure everyone understands we have a very firm eye on inflation".
