Nariman Behravesh Higher Quotations

It is encouraging that core inflation in 2005 was no higher than the year before even though we had record oil prices. From that perspective, the Fed can feel confident that inflation won't get out of control.

The higher energy costs will put a squeeze on both businesses and households. They're spending so much on energy - the households on gasoline, the airlines on jet fuel, for example - that they'll have to curtail elsewhere.

The problem is the combined effects of the disruptions from Katrina and Rita, plus the ripple effects in the economy from higher energy prices,

The Fed can take comfort in the fact that core inflation remains tame, despite some modest inflationary pressures - gradually rising wage inflation, tighter capacity constraints and higher oil prices.

The main thing is cost-savings which radiate out in the form of lower prices for high-tech goods, and higher profit margins for the companies,