There have been dark mumblings in financial markets during the past few weeks about the swift upward movement in US inflation in recent months. But Tuesday's comments from Alan Greenspan provided the clearest sign that the focus of monetary policy may now shift from reviving the economy to keeping inflation under control.
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Although the level of inflation remains modest, the rise has been unexpectedly sharp. The Federal Reserve's favoured measure of price pressures, the personal consumption expenditure deflator - excluding volatile food and energy prices - has shown inflation accelerating from 0.8 per cent at the end of last year to 1.4 per cent in April.

The trend in other measures of inflation has been even more dramatic. The consumer price inflation index excluding food and energy has jumped from 1.1 per cent in January to 1.8 per cent in April.

On an annualised basis the core CPI has been rising at 3.3 per cent in the first quarter compared to only 0.8 per cent in the three months to December.