The Federal Reserve expressed concern that Americans might start expecting high prices to continue. This marks the first time in recorded history that a central bank worried people would notice patterns.
Inflation stayed elevated for years. The Fed printed money like a divorced dad at Dave & Buster's. They kept rates at zero while housing doubled. They called it transitory. Then they called it persistent. Now they call it a fact of life, which is what your guidance counselor says when you ask why you're still working at Wendy's.
The real fear is anchoring. If consumers expect prices to stay high, they'll demand higher wages. Then companies raise prices more. It's a wage-price spiral, which sounds like a technical term but just means everyone gets f*cked in a circle.
The Fed could've raised rates earlier. They didn't. They could've stopped buying bonds. They didn't. They could've acknowledged that flooding the economy with trillions in liquidity might cause inflation. But that would've required admitting mistakes, and the Federal Reserve has the self-awareness of a golden retriever humping a stuffed animal.
Here's what actually happened. The Fed kept policy loose because politicians wanted free money. Voters wanted stimulus checks. Nobody wanted to be the adult. So they all agreed to pretend inflation was temporary until it wasn't.
Now Jerome Powell stands at podiums explaining how expectations matter. He's right. Expectations do matter. Which is why retail traders kept buying calls at the top expecting Powell to pivot, and now they're explaining to their wives why the Robinhood account looks like a crime scene.
The Fed meetings where they discuss inflation expectations must be incredible. Twelve economists in a room debating whether Americans will notice that everything costs more. Spoiler: they noticed when the Chipotle bowl hit fifteen dollars.
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