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I continue to think many of the factors holding down inflation are transitory... We want to be careful not to jump to a premature conclusion about what's in store for the U.S. economy.

Foreign trade clearly has been a reason why inflation has been low.

This crisis is not simply a more severe version of the usual business cycle recession, the typical downturn in which economies ultimately adjust and stabilize.

With the shrinking of the US economy, and it's shrinking very rapidly, you not only have more money, but you also have fewer goods. That's a classic double-whammy on inflation.

During the past two decades, inflation has fallen to a low level in major industrial countries.

The government will always tell you that it wants low inflation. The real issue is the horizon over which to bring inflation down.

Of course, looking tough on inflation is part of any central banker's job description: if investors believe that inflation is going to get out of control, you end up with higher interest rates and capital flight, and a vicious circle quickly ensues.

Deficits do not in themselves produce inflation, nor does a balanced budget assure a stable price level.

To be sure, faster growth in nominal labor compensation does not necessarily portend higher inflation.

The real problem is deflation. That is the opposite of inflation but equally serious to the borrower.