He said it would not be an inflation threat over the next three to six months.

He added: "This doesn't mean the inflation threat is over.

It would be an exaggeration to say that there's no inflation threat at all.

But I don't think that people have focused on the inflation threat.

In any case, the market yesterday was clearly re-evaluating the inflation threat and the chance of the Fed responding with higher interest rates.

Now it might be logical to expect that such news, a clear inflation threat, would spook the markets.

But others think Asia's problems will not dampen economic activity here enough to eliminate the inflation threat.

Rising energy costs have replaced wage pressures as a new inflation threat, the Fed said.

But many economists argue that the inflation threat has been overstated.

"There is no inflation threat, no chance of the economy overheating."