There could also be another effect of higher inﬂation expectations that some people may wish to see, because if nominal interest rates were to remain low at ﬁrst, real interest rates would fall in the short run and thereby revive the economy.
There are differing views on studies of the long-term decline in real interest rates and their monetary policy implications. [13] It would appear appropriate, at ﬁrst glance, for central banks to raise their targeted inﬂation rate quite sharply – as sharply as real interest rates have gone down. This would restore some of the lost interest rate policy scope, so the thinking goes.