Many economists expect inflation to rise in 1995. These expectations are based on various approaches to forecasting inflation. One approach is based on the standard economic theory that inflation rises when slack is eliminated from the economy and production exceeds capacity constraints....

Labor costs have recently come under scrutiny by policymakers, business economists, and financial market participants. The primary concern has been that tight labor markets might lead to faster compensation growth and, ultimately, to upward pressure on general inflation. The employment cost...

Price stability was not literally achieved in 1998, as many measures of the price level continued to rise, and inflation expectations were well above zero. Yet in 1998, consumer prices rose at the lowest rate in over a decade, and any upward pressures on inflation were surprisingly subdued....