monetary policy was ultimately needed to stem the high inflation and start the process of getting inflation down to the low and stable levels that were 2 / 3 bis central bankers'speeches the norm until the spring of last year. our aim is to avoid that outcome by acting with resolve now. these lessons are guiding us as we use our tools to bring inflation down. we are taking forceful and rapid steps to moderate demand so that it comes into better alignment with supply, and to keep inflation expectations anchored. we will keep at it until we are confident the job is done. 1 see ben bernanke ( 2004 ), “ the great moderation, ” speech delivered at the meetings of the eastern economic association, washington, february 20 ; ben bernanke ( 2022 ), “ inflation isn ’ t going to bring back the 1970s, " new york times, june 14. 2 see paul a. volcker ( 1979 ), “ statement before the joint economic committee of the u. s. congress, october 17, 1979, " federal reserve bulletin, vol. 65 ( november ), p. 888. 3 a review of the applications of rational inattention in monetary economics appears in christopher a. sims ( 2010 ), “ rational inattention and monetary economics, ” in benjamin m. friedman and michael woodford, eds., handbook of monetary economics, vol. 3 ( amsterdam : north - holland ), pp. 155 – 81. see alan greenspan ( 1989 ), “ statement before the committee on banking, housing, and urban affairs, u. s. senate, february 21, 1989, " federal reserve bulletin, vol. 75 ( april ), pp. 274 – 75. 3 / 3 bis central bankers'speeches

in moderating demand to better align with supply. we are committed to doing that job. the second lesson is that the public's expectations about future inflation can play an important role in setting the path of inflation over time. today, by many measures, longer - term inflation expectations appear to remain well anchored. that is broadly true of surveys of households, businesses, and forecasters, and of market - based measures as well. but that is not grounds for complacency, with inflation having run well above our goal for some time. if the public expects that inflation will remain low and stable over time, then, absent major shocks, it likely will. unfortunately, the same is true of expectations of high and volatile inflation. during the 1970s, as inflation climbed, the anticipation of high inflation became entrenched in the economic decisionmaking of households and businesses. the more inflation rose, the more people came to expect it to remain high, and they built that belief into wage and pricing decisions. as former chairman paul volcker put it at the height of the great inflation in 1979, " inflation feeds in part on itself, so part of the job of returning to a more stable and more productive economy must be to break the grip of inflationary expectations. " 2 one useful insight into how actual inflation may affect expectations about its future path is based in the concept of " rational inattention. " 3 when inflation is persistently high, households and businesses must pay close attention and incorporate inflation into their economic decisions. when inflation is low and stable, they are freer to focus their attention elsewhere. former chairman alan greenspan put it this way : " for all practical purposes, price stability means that expected changes in the average price level are small enough and gradual enough that they do not materially enter business and household financial decisions. " 4 of course, inflation has just about everyone's attention right now, which highlights a particular risk today : the longer the current bout of high inflation continues, the greater the chance that expectations of higher inflation will become entrenched. that brings me to the third lesson, which is that we must keep at it until the job is done. history shows that the employment costs of bringing down inflation are likely to increase with delay, as high inflation becomes more entrenched in wage and price setting. the successful volcker disinflation in the early 1980s followed multiple failed attempts to lower inflation over the previous 15 years. a lengthy period of very restrictive