The Model...

Demand and inflation would increase when (real) wages/income/savings/investment will increase and that would happen when prices would fall because in the short run income is fixed or is lower due to unemployment.

The neutral or natural or zero real rate of interest would neither increase/ decrease demand/supply/price at full employment with neither inflation nor deflation Wicksell...

In this situation nominal interest should also converge to zero, zero real interest rate and zero nominal interest rate...

When it is the time to expect inflation through real wages build up (after full employment) amid low oil prices (lower transport cost) which was a key for inflation the Fed has increased interest rate and interest rate expectations which would lower demand/supply/investment/employment/inflation and demand/supply/investment/employment/inflation expectations leading to lower price level or inflation and inflation expectation.

At full employment and full investment supply would be highest which would tail or converge to (highest) demand with more investment/employment and trade and would increase the economic rate of growth.

Prices might rise or fall depending on demand and supply.... which increases first..., in trade cycle... but in the short run there is a limit in which price can move on demand or supply.

Due to lack of data on demand/supply for whole economy the Fed might miss the inflation target, but it is easier to gauge inflation in the short run through the consolidated data on demand and supply in the economy.

Exuberance is common… higher demand-higher supply and lower demand-lower supply and price changes or volatility or inflation deflation.

The stock market is an ideal market place or model of the economy...