, Columnist
Inflation Psychology Is Being Jolted Back to Life
How concerned should the Fed be?
The Fed is creating the reality it wants.
Photographer: YOSHIKAZU TSUNO/AFP/Getty Images
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What exact measures should we hold on to when building forecasts for inflation? And how much care do we need to take over the issue of reflexivity? In inflation, as in many other areas of economic life, perceptions can form reality, and that is certainly true of inflation. That is why the Federal Reserve wants to see expectations “well anchored.”