Core CPI is actually in a gradual uptrend, though possibly well within the Fed's comfort zone. Meanwhile lower "gas" prices are putting cash back into consumer's pockets, whereas more QE could send the oil price skywards again. Positive signs are coming from the housing market, inventories are declining, more refinances are being made, debt is being paid down, volumes are picking up and prices are rising in most markets.
The Fed will have to balance making a knee-jerk reaction to short term weakness likely the result of external factors, with the risk of an inflationary breakout. The investment banks seem to have decided that the chance of QE3 next week is 75%, but they may just be talking their own books. IMO its not so cut and dried.
