Central banks urgently need to convince people that they are serious about getting inflation down. Changing the public’s mind could be extraordinarily difficult
by three-quarters of a percentage point. Central banks urgently need to convince people that they are serious about getting inflation down. But a range of evidence suggests that changing the public’s mind could be extraordinarily difficult.
Expectations are rising outside of America, too. A dataset put together by the Cleveland Fed, Morning Consult, a consultancy, and Raphael Schoenle of Brandeis University gauges public inflation expectations in various places. In May 2021 a respondent in the median rich country thought inflation over the next year would be 2.3%. Now they expect a rate of 4.2%.
Nor are Americans alone. In the late 2000s researchers at the Bank of Italy assessed whether people knew what inflation was. Many had only a fuzzy understanding—with half of respondents confusing price changes with price levels. In recent years Japan has implemented forceful monetary easing in order to boost inflation. But in 2021 more than 40% of Japanese people had “never heard” of the plan, according to an official survey.
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