It used to…it should… but it doesn’t right now. I know this is just a temporary thing but it’s a bit concerning nonetheless. In light of the liquidity problems in Europe, the ECB and BOE decided to keep rates unchanged while injecting another $57.7 billion into the system. Obviously, that makes sense for the time being as we have to deal with financial markets that are not functioning (Commercial Paper). But consider the fact that inflation is still advancing in Europe, in Asia, in Brazil and yes, in the United States. This global economic boom that everyone was cheering about at the beginning of July is still going on but it is being threatened by the cascade of subprime to CDO to Commercial Paper. So for now, Central Bankers seem to be willing to ignore the impact of inflation. That cannot last for long and once this liquidity problem is resolved, inflation will have to either come down or rates will likely have to go back up. It will be tough for the Fed to follow a similar strategy given that investors are expecting a cut, rather than a hold like Europe. But one thing remains, Central Banks cannot deal with market dislocation perpetually while the economic data is being ignored. Inflation used to matter, it is being ignored for now, but it will matter again.