Evans notes in this regard "that even if we were to tighten monetary policy...[it could] bring down commodity prices a percentage point, maybe two percentage points, but when you're worried about 15 percent or more in increases in commodity prices," such an impact would be negligible. Still, Evans acknowledges the broader linkage of monetary policy, commodity price pressure and the underlying elements driving volatility. Here he suggests, "developing countries, droughts in Russia, uncertainty in Mideast, a lot of other factors that swamp the effect of monetary policy."
At last week's Spend Matters International Trade Policy Breaking Point event (see coverage here), panelist Bill Strauss, senior economist and economic advisor in the economic research department at the Federal Reserve Bank of Chicago, suggested that inflation was not a major concern for the Fed at that point in time. Yet clearly for global manufactures -- and certainly domestic ones -- the current inflationary commodity price rollercoaster that we're on presents a giant challenge. But it appears that procurement and commodity management organizations will be on its own, as the Fed focuses on balancing inflation on one hand with an anemic economic recovery on the other (with at least one hand tied behind its back given the booming national debt and a questionable willingness of the Chinese and others to keep funding our national spending).
- Jason Busch