The article explores how monetary policy can be influenced by expected inflation and inflation risk premia. By using a complex model, the researchers found that inflation risk premia are small and stable, allowing policymakers to use the difference between nominal and real interest rates to estimate inflation expectations. Short-term real interest rates and expected inflation are negatively correlated, with real interest rates showing more volatility. The study also confirms that increases in inflation lead to higher nominal interest rates but lower real interest rates, known as the Mundell-Tobin effect.