learning about the nature of these deviations. Under constrained discretion, only short deviations occur, agents' uncertainty … about the macroeconomy remains contained, and welfare is high. However, if a deviation persists, uncertainty accelerates and … welfare declines. Announcing the future policy course raises uncertainty in the short run by revealing that active inflation …

.ation stabilization and agents face uncertainty about the nature of these deviations. When observing a deviation, agents conduct Bayesian … prompt return to the active regime, macroeconomic uncertainty is low, welfare is high. However, if a deviation persists …, agents.beliefs start drifting, uncertainty accelerates, and welfare declines. If the duration of the deviations is announced …