One’s views on inflation are likely to be shaped very much by when one was born. As pointed out by writer Neil Irwin, if you are an eighteen year old college freshman in the U.S., inflation in your lifetime has averaged less than two percent. If you are a thirty year old millennial, you have experienced inflation above five percent for only one year – when you were in kindergarten and had precious little buying power in any case.
If, however, you are one of the seventeen people who fashion monetary policy for the U.S., you have had a very different experience. The median age of the Federal Reserve System’s policymaking committee members is fifty eight, meaning that all of them were fully formed adults during the double digit inflation of the nineteen seventies and early 1980s. Irwin calculates that the average annual inflation for these Federal Reserve officials while they were between the impressionable ages of eighteen and thirty five was more than five percent.
This therefore would seem to be a group of people who would work hard to combat inflation. Perhaps surprisingly then, Federal Reserve policymakers have not increased the short-term interest rates they control for nine years and failed to do so again last month, in part because there’s still not much inflation out there.
