Dr. Alan O'Sullivan

And then when we got this repricing of bonds, it came from the real rate expectations and from term premium, which came from negative to positive.

But actually inflation expectations hardly moved in this time.

And that is weird because actual inflation, so the annual CPI went in the US from about 2% to 9% and then back to about 3% where we are now.

So that round trip didn't move long run inflation expectations much.

And I think that's today highly relevant because the main reason for those anchored inflation expectations, I think, was Fed's credibility.

And now, obviously, Fed's credibility is under some attack.

And therefore, I think we have got a bigger chance of getting de-anchored inflation expectations.

in the coming years if there are some shocks that would sort of require a disciplined policymaker to make sure that inflation comes back to target and that is now all open to question.

So I think this is something where I have what I would say

more current policy-relevant debate in the papers.

Well, both US and many other countries have had this ever-growing debt levels and markets have hardly cared about it.

And there's a saying sort of that markets don't care, don't care until they do.

And then you get sort of the Greece or Italy moment and so on.

And we haven't got to that.

And I think that...

That point might tie with what we were just talking about with the questions on Fed's independence and so on, which could cause something like this.

Again, I think the potential is there for something, some serious de-anchoring of inflation expectations, but there are almost as scary counter stories like you could use the QE and treasury management in such a way as to

You know, keep interest rates low, even when the inflation is higher.

And I'm sort of thinking about the thought of this most important asset price, 10-year treasury yield, becoming more important.

government-led than market-led.