In that regard, the lack of pricing power reported overwhelmingly by business people underscores an absence of inflationary zest. Undoubtedly businesses are feeling the effects of diminished pressures in product markets. With energy inflation probably peaking and the easing of tightness in labor markets expected to damp wage increases, prices seem likely to be contained.
We have often pointed before to the essential role that low inflation expectations play in containing price pressures and promoting growth. Any evident tendency in financial markets or in household and business attitudes for such expectations to trend higher would need to factor importantly into our policy decisions.