Then, as inflation subsided, his kind of advice, and that of others, fell from favor.

But as the Fed moved short-term rates even higher, investors began to become more confident that the economy would slow and inflation would subside.

Others predict that inflation will indeed subside, but only because the economy will weaken much more than the Fed is expecting.

But inflation in services subsided to a 2.6 percent pace during the third quarter, one of the lowest rates since the 1960's.

"But when inflation subsided, they had some rough years," he said.

Later, it t hopes that inflation will subside to tolerable levels.

At the same time, inflation subsided to a 1.8 percent annual rate, the weakest rise for a quarter since oil prices collapsed in 1986.

But he suggested that inflation would gradually subside in 2007 to just above the central bank's informal comfort zone.

So far, it has deferred to the slowing economy and left interest rates untouched for the last two months, saying that inflation will eventually subside.

Reports have already indicated that the Fed is ready to push the Federal funds rate higher if inflation does not subside.