Inflation being volatile and different from what markets expect:

Question

Quizplus · Accepted Answer

Inflation that is volatile and differs from market expectations can damage the relationship between borrowers and lenders because it affects the real value of loans and repayments. If inflation is higher than expected, lenders lose because the money they get back has less purchasing power. If it's lower, borrowers may pay back more in real terms than they anticipated. This unpredictability can lead to reduced lending and borrowing activity, impacting the overall economy.

Inflation Being Volatile and Different from What Markets Expect