Inflation Expectations and Price Setting Among Fifth District Firms.

A survey conducted by the Federal Reserve Fifth District reveals that businesses become more reactive to inflation as it rises, but this reactivity reverses as inflation decreases. The survey also indicates that inflation expectations play a significant role in how most firms set their prices. The findings suggest that actively keeping inflation under control is important to avoid unanchoring of inflation expectations. As inflation has come down, the attention paid to inflation and the importance of inflation expectations in price setting have also decreased. [Extracted from the article]