nope that "hunting" effect is caused by the second limit setting, when you set a limit you set the amount you want the limit to kick in at, then you set the amount of negative (or positive !) ratio to be applied to your current ratio depending on your channel, basically you hit the limit and then the controller (usually) knocks the ratio down a bit so you are just under the limit (if you set it correctly) and it will stay at that. Having a gain too high can cause this as well I think.
Spiking in this case is caused by having the gain too high, basically if you set a limit of 1 bar and you plant your foot down the pressure will build up quickly (depending on revs obviously) and by the time controller reacts (either because of a gain too high, processing resolution or too long a pipe run) the pressure is already past the limit value, if you have a look at the peak value you might see this above the limit value.
One method of setting the controller (and this is how mine is set) is to set the limit above the expected boost valve given the ratio and the gain just as a safety feature and not expect to be bouncing off it. My settings give 0.55 (restrictor removed), 0.8, 1.0 and 1.2bar with the limit set to 1.26. I don't think the gain is too high either. I usually get around 1.20 or 1.21.
By all means set the limit and the drop-down ratio as you want it but this will give the "hunting" effect and the beeping gets a bit annoying. You also tend to ignore it after a while as well which isn't really the point.