Among other problems, significant pressures on bank balance sheets were beginning to emerge that would damp economic growth for the next several years. While dealing with the serious economic issues of the time, John and the other members of the Council simultaneously produced an impressive manifesto for policymaking.
With sticky prices, higher rates of inflation cause the price spread to widen and create larger differences between prices of otherwise similar products at different points in the term of their fixed contracts. This, in turn, increases price dispersion and leads to even larger allocative inefficiencies.