4 Should the dollar stabilize, the downward influence on inflation should dissipate. But, as with oil prices, the movement in the value of the dollar has been more persistent than markets and many observers expected, with increases in every quarter since mid-2014. If the labor market continues to improve, higher resource utilization should also put some upward pressure on inflation going forward.
However, the effect of resource utilization on inflation is estimated to be much lower today than in past decades. 5 An important concern about persistently low inflation is that it can lead to a fall in longer-term inflation expectations, making it much more difficult to achieve our inflation target.