In a speech about monetary politics pronounced at the end of August, the president of the fedthe US central bank, made mention of what can literally be translated as rational inattention.
This concept derives from the evidence that economic agents, both individuals and companies, tend to pay attention only to relevant factors and events in order to make decisions, these being usually the ones that are subject to variations that may affect said agents. Something that is expected will not change, it is usually relegated as one more of the data that defines the environment within which the activities are carried out.
The mention of the concept was made as an argument to justify a vigorous monetary politics restrictive in order to put the inflation under control, reducing it from more than 8% per year to the target level of 2%. Until that moment, he said, the expectations of economic agents were inclined towards long-term price stability, considering the current rises as a transitory phenomenon. But if the persistence of inflationary conditions continued, expectations would change, moving towards glimpsing the inflation as a longer process. This would cause the rational forgetting of it as a relevant factor for decisions to be replaced by the conscious inclusion of it in expectations about the future, altering behavior in the opposite direction to stability.
The conclusion of the president of the fed was that the battle against inflation It had to reduce it as quickly as possible, applying the necessary measures, before expectations changed and caused the actions of economic agents to reinforce price increases.
He did not mention in his speech, logically, that the previous expansive policy of the own fed it was one of the main causes of the problem that is now trying to be solved.
