Evidence suggests, particularly in the U.S. economy, that the actual inflation experience is driven by inflation expectations, resource utilization—usually measured by a gap term as in the Taylor Rule—and “supply shocks” such as changes in the world market prices of energy and other commodities.

I don't see, from what I know now, a likelihood of a real inflation outbreak.  Rather, what seems to be more likely is that we will have a persistance of inflation.  what I'm hoping is that it is persistently tapering off, rather than persistently creeping up.

From Q&A session as reported by Bloomberg News

I think there's a danger of inflation becoming entrenched at the level it is now with core inflation well over two and I think that most people and I myself personally would like to see it down around one-and-a-half percent..

Right now it's difficult at all times to get a hand on where people in the economy generally expect inflation to be. But right now I think there's, you know, a sense that inflation expectations are contained but having said that, there's a dispersion. There's, you know, a range of view about how rapidly inflation will come back down.
    The longer we let inflation remain, core inflation, remain where it is I think the more likely it is that expectations collapse on core inflation remaining about where it is now rather than declining as I would like to see it decline.
     So that's what I mean by becoming entrenched, becoming firmly lodged in the public's mind as an expectation that that's the inflation rate we're going to tolerate and I think that would be a mistake.

I just don't think that growth by itself is going to take inflation down. I'm not sure how many people really view that as going to be the key driving force of inflation going forward. What I think is more likely is the fact that the increases in core inflation we've seen thus far have been in response to oil price increases. And if oil prices - energy prices trace out the trajectory implied by futures markets, which is to say fairly flat from here on out, then that pressure from oil price increases is - on core inflation is likely to subside. And I think that's where, you know, where the hope is for bringing inflation down without further rate increases and we said that again, obviously in the camp of thinking that we needed to raise rates to make sure that inflation comes down.

Taking all of these factors into account, my assessment is that the risk of inflation remaining too high is greater than the risk of growth being too low. Thus some additional firming of policy may yet be necessary to bring inflation back into the comfort zone within a reasonable period of time.

The measure of core consumer inflation that the FOMC projects for Congress—the personal consumption expenditures price index excluding the volatile food and energy components—has risen rather sharply in recent months. It rose by nearly 3 percent in the second quarter, which implies an increase over the past year of 2¼ percent. This rate is somewhat above my "comfort zone"—a range between one and two percent that I consider an appropriate long-run inflation objective for the Fed.

Recent evidence suggests that there has been much less passthrough in the past twenty-five years than there was back in the 1970s, when inflation got out of control in the face of soaring energy prices. If it's true that there's only a very small passthrough of higher energy prices to inflation currently, then that raises the concern that something more fundamental is pushing up inflation. Unfortunately, at this point, it's too soon to untangle these alternative interpretations.

If you look even today at the futures markets, the futures markets predict energy prices will be relatively flat over the next couple of years. If you take that forecast as correct, then today's core inflation rate is actually a reasonable forecast of tomorrow's total inflation rate if energy prices do, in fact, flatten out as the markets seem to expect.

The increase in inflation we have seen is a much broader phenomenon than that single component [owner-occupied equivalent rent in the CPI].  If that single component was the only issue, I would think twice. But I do see movements in inflation in a broad range of goods and services.

Well, I think that the risk that we are considering -- and again, it's just a risk, that inflation might move up and might force us to be more aggressive, which we don't want to do, because we hope that inflation will stay under control and come down as we expect it to -- I think that is a risk.

FOMC participants project that the growth in economic activity should moderate to a pace close to that of the growth of potential both this year and next.  Should that moderation occur as anticipated, it should help to limit inflation pressures over time.

Amid signs of slower growth, recent inflation news has been somewhat distrubing.  While higher energy costs have caused broad inflation measures to rise over the past few years, most core measures of inflation, which exclude volatile energy and food prices, have remained low.  In the past few months, however, we have seen sizeable increases even in core measures of inflation...If these recent elevated inflation readings persist, they could make it difficult for the Federal Reserve to maintain price stability over a medium-term time horizon.

Generally speaking, a change in the federal funds rate today may take an estimated 12 to 18 months to affect inflation measures.

The Federal Reserve should only respond to high current inflation to the extent that inflation is expected to be very persistent.  Indeed, to the extent inflation pressures are seen as temporary and policy is currently restrictive, maintaining the current policy stance may be consistent with a reduction in inflation over time.  Of course, the other aspect of this is that if inflation pressures remain elevated, then they will affect inflationary expectations requiring more forceful actions later.

While we can point to types of goods for which prices are restrained by forces from abroad, the net effects of globalization on domestic inflation of all goods and services need not even be negative, especially in today’s environment of strong global growth.