With a tip of the hat to Mark Thoma (Economist's View), I direct you to today's speech by Donald Kohn.
The speech confirms what I've thought for a while. Donald Kohn's perspective makes his speeches very much worth reading. He was secretary of the FOMC for 15 years before becoming a governor (as well as Director of the Division of Monetary Affairs for nearly all of that time). In a sense, he served the equivalent of a full term of a governor as a non-voting staff member. He is in a unique position to speak on these issues because he's seen it from both sides (staff and governor). That makes for a good speech on inflation expectations and inflation forecasting.
The contrast of his speech and Bill Gross's recent comments on inflation provides a very interesting backgrond to the current problems facing forcasters and markets.
If you use lagged inflation as a measure of inflation expectations you should conclude that wages and inflation will accelerate much more then Gross suggest unless you are expecting a sharp slowing of growth and the creation of significant economic slack.
Interesting speech, though there was one paragraph that made me blink. Kohn states that one factor leading to a gradual reduction in the "natural rate" of unemployment was the gradual withdrawal from the labour force of those with above average unemployment rates.
This seems cockeyed to me. How does a withdrawal from the labour force of some people reduce the natural rate? I can see how such a change makes it more difficult to interpret unemployment statistics - but that's not quite the same thing. Perhaps I'm splitting hairs.