Yes, it will lead to grade inflation. The important question is: does that matter? Exams already have their flaws such as being far more likely to give a flawed

Yes, it will lead to grade inflation. The important question is: does that matter? Exams already have their flaws such as being far more likely to give a flawed bad grade to someone than a flawed good grade. How much grade inflation would you see purely from eliminating that effect? And that would largely be desirable.