What term refers to when inflation expectations remain stable despite changes in actual inflation rates?

The term that refers to when inflation expectations remain stable despite changes in actual inflation rates is known as anchored inflation expectations. This concept implies that individuals, businesses, and financial markets have a solid belief about the long-term rate of inflation, which is not easily swayed by short-term fluctuations in actual inflation. When inflation expectations are anchored, people tend to make decisions based on their belief that inflation will remain low and stable, which can help contribute to overall economic stability.

For instance, when individuals expect inflation to hover around a certain target set by a central bank, they are less likely to change their behavior significantly even if the actual inflation rates go up or down temporarily. This anchoring helps maintain stability in wage negotiations, pricing strategies, and investment decisions, as the expectation of moderate inflation encourages more predictable economic planning.

In contrast, the other choices do not specifically address this stability in expectations. Variable inflation rates indicate fluctuations in inflation but do not speak to how expectations react to those changes. Adaptive expectations relate to adjusting future expectations based on past information, while inflation indexing refers to mechanisms designed to adjust income or benefits to changes in inflation, rather than the stabilization of expectations itself. Hence, anchored inflation expectations is the most appropriate answer.