Why We Care About Inflation

Tom Barkin

Speech from Federal Reserve Bank of Richmond

Abstract: Since the mid-'90s, inflation has been low and stable. But no one is forgetting inflation today. At first, inflationary pressures seemed temporary, driven by pandemic reopening or supply chain challenges like chips in cars. But the inflationary news just keeps coming. All of this has depressed consumer sentiment, and business sentiment has fallen too. So, we need to get inflation under control. I see inflation coming down on two paths. A number of these pandemic-era pressures will eventually settle. At the same time, interest rates will impact demand and expectations. And, as we act, we send messages to consumers and firms that will manage their expectations for future inflation. All this will take a little time, but make no mistake, we are on the case.

Keywords: inflation; monetary policy (search for similar items in EconPapers)
Date: 2022-05-10
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