Anchoring inflationary expectations

News Today 26.04.2022

Milton Friedman famously said, ‘Inflation is taxation without legislation.’ The impact of inflation — the overall increase in the prices in an economy — is felt by everyone. High inflation adversely affects the poor. Individuals, therefore, form expectations about how prices will behave in the future to take precautions. If they anticipate high inflation, they negotiate wages or rents to compensate against a potential fall in their purchasing power. (Read More)

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