Inflation peaked in 1923, when prices doubled in less than 4 days.2 Such astronomically high price increases deeply interfered with people’s everyday lives. This was expressed in John Maynard Keynes’ quip that people got used to ordering two beers at a time, because the price would rise faster than the beer became warm.3 Extreme cases illustrate one aspect of the costs of inflation.
We keep a close watch on whether interest rates are not so low as to interfere with transmission, i.e. whether banks are still passing on the low interest rates to the real economy. As regards pension funds, one also needs to acknowledge that the performance of pension funds and their investments depends on many other factors and not only on interest rates.