I tried all proposed methods, but no change.
To my humble opinion this must be a bug in Outlook., not in OSX, because Outlook is the only application with this problem.
And it must be something recent. Previous versions of Outlook did not have this problem.
Is it possible to get an older version?
It would be nice to hear an opinion of a Microsoft specialist.
I agree. This is clearly something within Outlook and/or the interaction between Outlook and Exchange. The symptoms do not exist when using the Apple Mail program. And, furthermore, after taking no additional steps, the problem stopped on it's own. So I did
nothing, but everything went back to normal. That is not a normal scenario if the issue were on 'my side'. The fact that Microsoft 365 support staff went radio-silent on me and flat out stopped communicating with me for 2 weeks until I contacted the manager
also suggests there is something more to this.