Question

If inflation expectations rise, even without any fundamental economic reasons, it is likely that the expectations themselves O will lead to higher prices and inflation O lead to lower prices and inflation O lead to overshooting O will make monetary policy more accomodative

Answer 1

In turn, this could potentially lead to overshooting, where inflation rises beyond the target set by central banks. To counteract this, monetary policy may need to become more accommodative, meaning that interest rates may need to be lowered to stimulate demand and keep inflation in check.