In the case of the U.S., since households and firms sensed that the Fed was not going to pay a lot of attention to inflation, they probably realized that the oil shocks would lead to substantially higher future inflation and adjusted their expectations accordingly. By contrast, the Fed in the 2000s is more committed to fighting inflation, the public knows it, and the result has been that, even though headline inflation has risen noticeably because of the direct effects of oil and commodity shocks, core inflation and inflation expectations remain contained.
