TechFlow news, on March 6, former Federal Reserve Chairman Bernanke said at a meeting in Wellington, New Zealand, that the recent acceleration of inflation the world has experienced could make it harder for central banks to control prices in the future.
Bernanke pointed out that the post-pandemic inflation surge will affect consumer behavior—firms may find it easier to raise prices, consumers may become more sensitive to inflation, and expectations may adjust accordingly. He suggested that central bankers might become more vigilant about allowing price spikes again, citing research indicating that policymakers who lived through the economic shocks of the 1970s "are generally more hawkish than younger ones."
Bernanke believes a key lesson from the most recent inflation cycle is that central banks' communications should place greater emphasis on the possibility that outcomes may differ significantly from forecasts, and that appropriate monetary policy responses are needed when reality diverges from predictions.
