A credible disinflation

Short-run Phillips curve shifts left. Long-run Phillips curve stays put.

The short-run Phillips curve is anchored by expected inflation. When credible policy lowers expected inflation, every unemployment rate now comes with lower actual inflation, so the SRPC shifts left, or equivalently down. The long-run Phillips curve does not move because the natural rate is unchanged.

Inflation is lower at every unemployment rate, and the economy returns to the natural rate with lower inflation.

Common mistake. Students often move the economy along the SRPC to higher unemployment, the costly way to cut inflation. If expectations fall, the curve itself shifts, and inflation falls with little or no rise in unemployment.