Evidence suggests that higher income households understand U.S. monetary policy better than those on low incomes

The way that the public responds to changes in monetary policy can be integral to whether such changes are successful. But how much do people really understand monetary policy? Using data from consumer surveys and inflation, interest rate and unemployment data, Carlos Carvalho and Fernanda Nechio find evidence that households do form expectations in a way that is consistent with the conduct of monetary policy. They also write that this evidence is more pronounced for households that have higher incomes.