Over time, the statement was expanded to include more detailed information about the reason for the policy decision and an indication of the balance of risks.36 In addition to improving the effectiveness of monetary policy, these developments in communications also enhanced the public accountability of the Federal Reserve. Accountability is, of course, essential for policy independence in a democracy.
The inflationary challenges are being experienced most acutely as shocks to people's real incomes and an erosion of their living standards. The profit margins of businesses, particularly the smaller businesses with less scope to pass on cost increases to customers, will suffer due to the size of their energy bills and other costs as well as falling revenues as customers reduce discretionary spending.