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What is inflation expectations?

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What is inflation expectations?
posted Aug 14, 2017 by Ati Kumar

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A concept where the rate of inflation becomes "expected" versus the rate of demand inflation (i.e. inflation based on economic factors). Expectational inflation acts as a secondary force that reinforces, or builds upon primary inflation forces such as excess demand or cost push. This secondary force has an effect on the actual rate of inflation, as the expectations of the market influence the economic triggers that drive inflation. Theory dictates that because of this secondary effect, the rate of inflation can never be held constant even in a stable economy. See also demand pull inflation and cost push inflation.

answer Aug 16, 2017 by Deepak Jangid
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