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Shaking Off Global Rate Worries

Furthermore, while pressure may be building in Europe, inflation in the United States seems to be on a downward path, said Lakshman Achuthan, managing director of the Economic Cycle Research Institute.

The ECRI tracks underlying drivers of inflation and publishes a monthly forecast closely watched by financial markets. The group's future inflation gauge for the U.S. has fallen about 5 percent from where it peaked at the end of 2005 - one of the reasons why Achuthan doesn't expect the Fed to hike rates anytime soon.

Core inflation has moderated and fallen into the Fed's unofficial target zone of 1 to 2 percent. While inflation has ebbed, Fed Chairman Ben Bernanke said Tuesday that risks on the inflation front remain to the upside, though he also noted the drag on the economy from housing would be longer than originally expected.

The Fed raises rates when it wants to slow growth and ward off inflation, and cuts them in order to spur growth.

And even though inflation has eased, it's not as benign as it has been in previous recessions or during periods of sluggish growth, such as in the mid-1990s or in 2001, partly due to the strength in many mature and developing economies around the world, Achuthan said.

The simultaneous expansion in industrialized nations, along with breakneck growth in India and China the last four years, has helped soak up excess capacity - which in turn has put upward pressure on prices.

Nonetheless, "when you objectively add up what are the leading indicators, they still directionally point to milder U.S. inflation for the next few quarters," Achuthan said. "That could change, but for now I would hold off on ringing the alarm bells on U.S. inflation," he said.