R. W. Hafer examines the effect of monetary and nonmonetary factors in explaining the recent decline in inflation. Hafer finds that the decline in the average rate of money growth during the past few years accounts for the downward trend in inflation. Moreover, he finds that the drop in the inflation rate below that implied by the rate of money growth is explained, to a large degree, by the downward movement in the relative price of energy. When the influence of the declining relative price of energy abates, however, Hafer argues that “inflation will tend to move back in line with the average growth of money.” Using estimates obtained from the I/1960-I/1983 sample period, and assuming that the average rate of money growth continues to grow at 7.5 percent (the trend growth in I/1983), the author simulates the inflation rate for the period 1983-85 for different assumptions about energy price changes. If relative energy prices remain unchanged, inflation was simulated to be about 6.5 percent in 1983 and above 7 percent in 1984 and 1985. If relative energy prices decline throughout 1983 then stop declining, inflation was simulated to be about 6 percent in 1983 and about 7 percent for 1984 and 1985. Hafer concludes that the popular notion that inflation finally has been tamed is likely to be invalid unless the average growth of money is significantly reduced.