Well, we approach {energy price forecasting} at the Federal Reserve on essentially two levels.
First, we try to do a fundamental supply-and-demand analysis, try to look at how we expect demand to grow both not only in the United States, of course, but in emerging markets and around the world and where we see supply emerging in OPEC and outside of OPEC, and try to make some sense of where that market is going.
But another very important piece of information is futures markets. Investors in -- dealing in NYMEX and other futures markets put their money, essentially making bets where they think the price of oil is going to be at various horizons going out to six or more years.
Those futures markets have been wrong in the past. They have underestimated the increase in oil prices that we've seen, which is one reason why we're very cautious about it. But over long periods of time they're probably about the best source of information we have about where the markets see energy prices going.
And so the markets -- those energy markets currently see oil prices remaining high, but leveling off over the next couple of years, to the point where, if that actually happens, overall headline inflation would be about the same as core inflation.
From the Q&A session