Definitions for "Rational Expectations"
the hypothesis that decision-makers base their decisions on predictions which contain no systematic errors.
In forming opinion about future events, the use of all available information to assess the probabilities of the possible states of the world. More simply, expectations that are as correct as is possible with available information.
Expectations about the future rate of inflation or other economic events that people form using all available information, including predictions about the effect of present and future policy actions by the government.
Market participants intuitively anticipate systemic policy actions and their consequences for the economy; thus, on average, private market forecasts are accurate and planned policy is ineffectual (see New Classical Macroeconomics).
The idea that people rationally anticipate the future and respond to what they see ahead.