We introduce price posting and search frictions into Townsend’s (1980) monetary macro model. Despite costless price adjustment, insufficient search incentives prevent Walrasian outcomes. The set of possible stationary equilibria comprises a finite interval of constant-inflation price paths. We assume that inflation expectations are rational and that they are stationary whenever possible. In this model, transitory small shocks temporarily affect quantities but not prices. However, large shocks—or accumulations of smaller shocks—can move the entire interval of equilibrium price paths beyond the previous path, forcing price adjustment. Even if shocks are temporary, such price movements create persistent changes in output.