1. While the terminal rate over the projection horizon will be different to the peak rate if a fairly-rapid descent from the peak rate is anticipated, for the purpose of these remarks, I will keep it simple by focusing on a scenario in which the peak rate and the terminal rate are the same over the projection horizon. 2.
See Reis, R. (2022) “Inflation and Expectations: Rise and Responses”, Speech at the ECB Forum on Central Banking and Hilscher, J., Raviv, A. and Reis, R. (2022) “How likely is an inflation disaster”, CEPR Discussion Paper, No. 17224. 3. See, for example, Bordalo, P., Gennaioli, N., Shleifer, A. (2022), “Overreaction and Diagnostic Expectations in Macroeconomics”, NBER Working Paper, No. 30356.