The article argues that the Federal Reserve’s biggest problem today is not inflation itself but the failure of its communication to reach ordinary households. While actual inflation has fallen to around 2.7%, many Americans still expect much higher inflation and feel pessimistic about the economy, leading them to behave as if inflation is still a crisis. Using an analogy from category theory, Mardoqueo explains that the Fed’s intended communication chain, from Fed announcements to financial markets to household expectations, no longer works for most people because households pay more attention to everyday prices like groceries than to markets or Fed statements. As a result, inflation expectations remain unanchored, weakening the Fed’s credibility at a sensitive political moment. Until the Fed finds a way to fix or adapt to this broken communication channel, the gap between economic reality and public perception is likely to persist.

Central bankers like to say that monetary policy works through expectations. A beautiful concept implying a public that is constantly calculating, analyzing, and adjusting to the Fed's subtle signals. But that sophisticated engine only runs, of course, if someone actually bothers to update those expectations. In a paper I have forthcoming in the Journal of Economic Analysis, I dig into this very question: Do U.S. households truly revise their core assumptions about inflation, interest rates, and housing when the Federal Reserve makes an announcement? The period I examined (2013 to 2021) was nearly a decade full of unconventional tools, "forward guidance," and agonizingly slow normalization. This was the perfect test bed to see how much of the Fed's careful communication truly reaches the public.

The short answer? It reaches them, but on very narrow terms.