Mary Daly, Interview: Los Angeles World Affairs Council & Town Hall

“One major evolution that separates today’s Federal Reserve from the Federal Reserve 50 years ago is a deep understanding that inflation expectations influence future inflation. If people expect inflation to persist, then it does. And this understanding led the Fed and economist more broadly to a critical insight. In order to manage actual inflation, policymakers also have to manage inflation psychology. The Fed has to enlist the help of households, businesses, and market participants in the job of fighting inflation by communicating with them about its commitment to price stability and its plan to achieve it.”