In recent months, break-even inflation rates, ie the difference between yields on nominal and real bonds, have been abnormally volatile, falling to unprecedentedly low levels before recovering somewhat in early 2009. The US 10-year break-even rate, for example, dropped to almost zero in late 2008 after having remained relatively stable at around 2.5% over the past several years (Graph A, left-hand panel). A similar pattern, albeit less pronounced, has been seen in euro area break-even rates (Graph A, centre panel).

A natural question to ask is: to what degree should these recent fluctuations be viewed as representing actual changes in expected inflation? Break-even inflation rates have long been used as an indicator of the markets' inflation expectations over the horizon of the bonds. Of course, during the financial crisis, the huge price swings in many markets, including those for nominal and index-linked bonds, have partly reflected "non-fundamental" factors. All in all, while falling inflation expectations are likely to have contributed to the drop in break-even rates, a substantial part of the decline was probably due to other factors, including liquidity and "market technicals".

Generally speaking, break-even rates can be thought of as consisting of four major components: (i) expected inflation; (ii) inflation risk premia; (iii) liquidity premia; and (iv) "technical" market factors.

From the BIS website:

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See the website for working links....I'm not going to fix all of these....

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Speeches on the recent financial crisis

The following speeches by senior central bank officials discuss the financial turmoil.

Jean-Claude Trichet: The ECB's response to the crisis
Statement by Mr Jean-Claude Trichet, President of the European Central Bank, at the European American Press Club, Paris, 20 February 2009.
Ben S Bernanke: Federal Reserve policies to ease credit and their implications for the Fed's balance sheet
Speech by Mr Ben S Bernanke, Chairman of the Board of Governors of the US Federal Reserve System, at the National Press Club Luncheon, National Press Club, Washington DC, 18 February 2009.
Petar Goshev: Brief overview of the financial crisis and its impact
Opening speech by Mr Petar Goshev, Governor of the National Bank of the Republic of Macedonia, at the international economic forum “Faster towards the European Union”, organized by the Economic Chamber of the Republic of Macedonia, Ohrid, 2 November 2008.
Lucas Papademos: Tackling the financial crisis – policies for stability and recovery
Speech by Mr Lucas Papademos, Vice President of the European Central Bank, at the Annual Dinner of the Society of Business Economists, London, 11 February 2009.
Hervé Hannoun: Long-term sustainability versus short-term stimulus: is there a trade-off?
Speech by Hervé Hannoun, Acting General Manager of the Bank for International Settlements, at the 44th SEACEN Governors’ Conference on "Preserving Monetary and Financial Stability in the New Global Financial Environment", Kuala Lumpur, 7 February 2009.
Amando M Tetangco, Jr: Antecedents of the global financial crisis – a multi-factorial phenomenon
Speech by Mr Amando M Tetangco, Jr, Governor of the Central Bank of the Philippines (Bangko Sentral ng Pilipinas), at the Sixth Sec. Alfonso Yuchengco Policy Conference, Makati City, 2 February 2009.
José Manuel González-Páramo: Financial market failures and public policies – a central banker’s perspective on the global financial crisis
Closing remarks by Mr José Manuel González-Páramo, Member of the Executive Board of the European Central Bank, at the XVI Meeting of Public Economics, Granada, 6 February 2009.
Philipp Hildebrand: The global financial crisis – analysis and outlook
Summary of a speech by Mr Philipp Hildebrand, Vice-Chairman of the Governing Board of the Swiss National Bank, at the NZZ-Podium, Zurich, 5 February 2009.
Masaaki Shirakawa: International banks amid global financial crisis
Address by Mr Masaaki Shirakawa, Governor of the Bank of Japan, at the Information Forum of the International Bankers Association, Tokyo, 27 January 2009.
Christian Noyer: Lessons from the crisis. A central banker’s reflections on some accounting policy issues
Speech by Mr Christian Noyer, Governor of the Bank of France, at the European meeting of the accounting profession, Paris, 11 December 2008.
Mario Draghi: Combating the global financial crisis – the role of international cooperation
Text of the HKMA Distinguished Lecture by Mr Mario Draghi, Governor of the Bank of Italy and Chairman of the Financial Stability Forum, Hong Kong, 16 December 2008.
Fabrizio Saccomanni: Managing international financial stability
Edited text of remarks by Mr Fabrizio Saccomanni, Director General of the Bank of Italy, at a meeting at the Peterson Institute for International Economics, Washington DC, 11 December 2008.
Jürgen Stark: The financial crisis and its consequences for the world economy
Speech by Mr Jürgen Stark, Member of the Executive Board of the European Central Bank, at the conference organised by Aktionsgemeinschaft Soziale Marktwirtschaft e.V. and Eberhard-Karls-Universität Tübingen, Tübingen, 10 December 2008.
Lorenzo Bini Smaghi: The financial crisis and global imbalances – two sides of the same coin
Speech by Mr Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank, at the Asia Europe Economic Forum conference “The Global Financial Crisis: Policy choices in Asia and Europe”, Beijing, 9 December 2008.
Jean-Claude Trichet: Remarks on the financial turmoil
Speech by Mr Jean-Claude Trichet, President of the European Central Bank, at the British Bankers Association’s Annual Reception, European Parliament, Brussels, 8 December 2008.
Jean-Pierre Roth: Fifteen months of financial crisis – a status report
Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the Associazione Bancaria Ticinese, Centro di Studi Bancari, Vezia, 3 December 2008.
Ben S Bernanke: Federal Reserve policies in the financial crisis
Speech by Mr Ben S Bernanke, Chairman of the Board of Governors of the US Federal Reserve System, at the Greater Austin Chamber of Commerce, Austin, Texas, 1 December 2008.
Jose de Gregorio: Price stability and financial stability – some thoughts on the current global financial crisis
Speech by Mr José de Gregorio, Governor of the Central Bank of Chile, at the meeting Pensando Chile 2009. Propuestas y Desafíos en Tiempos de Crisis (Thinking Chile 2009, Proposals and Challenges for Critical Times), organised by Pontificia Universidad Católica de Chile, El Mercurio newspaper and Banco Santander, Santiago, 3 November 2008.
Randall S Kroszner: The Community Reinvestment Act and the recent mortgage crisis
Speech by Mr Randall S Kroszner, Member of the Board of Governors of the US Federal Reserve System, at the Confronting Concentrated Poverty Policy Forum, Board of Governors of the Federal Reserve System, Washington DC, 3 December 2008.
Pierre Duguay: Fostering financial system stability
Remarks by Mr Pierre Duguay, Deputy Governor of the Bank of Canada, to the Pictou County Chamber of Commerce, Pictou, Nova Scotia, 27 November 2008.
Lorenzo Bini Smaghi: Restoring confidence
Speech by Mr Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank, on the panel: “Society, State, Market: a European Answer” at the International Forum Economia e Società Aperta “Uscire della crisi”, organised by Bocconi University and Corriere della Sera in cooperation with University Carlos III de Madrid, Madrid, 25 November 2008.
Henrique Meirelles: Bretton Woods II – on its way out?
Speech by Mr Henrique Meirelles, Governor of the Central Bank of Brazil, at the 18th Frankfurt European Banking Congress, Frankfurt am Main, 21 November 2008.
Tarisa Watanagase: Global financial crisis and economic integration in Asia
Address by Dr Tarisa Watanagase, Governor, Bank of Thailand, at the TU-JBIC International Conference on "The Future of Economic Integration in Asia", Bangkok, 21 November 2008.
Jose Manuel Gonzalez-Paramo: The financial market crisis, uncertainty and policy responses
Speech by Mr José Manuel González-Páramo, Member of the Executive Board of the European Central Bank, at the IE Business School Annual Alumni Conference, Madrid, 21 November 2008.
John Gieve: Learning from the financial crisis
Speech by Sir John Gieve, Deputy Governor of the Bank of England, 2008 Europe in the World Lecture Panel Discussion, at the European Business School, London, 19 November 2008.
Christian Noyer: Some thoughts on the financial crisis
Speech by Mr Christian Noyer, Governor of the Bank of France, at Paris-Europlace, Tokyo, 18 November 2008.
Ben S Bernanke: Troubled Asset Relief Program and the Federal Reserve's liquidity facilities
Testimony of Mr Ben S Bernanke, Chairman of the Board of Governors of the US Federal Reserve System, before the Committee on Financial Services, US House of Representatives, Washington DC, 18 November 2008.
Barbro Wickman-Parak: The financial crisis from a central bank perspective
Speech by Ms Barbro Wickman-Parak, Deputy Governor of the Sveriges Riksbank, at the Swedish Bankers' Association annual meeting, Stockholm, 12 November 2008.
Már Gudmundsson: How might the current financial crisis shape financial sector regulation and structure?
Keynote address by Már Gudmundsson, Deputy Head of the Monetary and Economic Department of the BIS, at the Financial Technology Congress 2008, Boston, 23 September 2008.
Nout Welink: The importance of banking supervision in financial stability
Keynote address by Dr Nout Wellink, President of the Netherlands Bank and Chairman of the Basel Committee on Banking Supervision, at the High Level Meeting “The Role of Banking and Banking Supervision in Financial Stability”, Beijing, 17 November 2008.
Lars Nyberg: Challenges following the current crisis
Keynote address by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, at the 12th annual conference of the Central Bank of Chile "Financial stability, monetary policy and central banking", Santiago, 6 November 2008.
Miguel Fernandez Ordonez: The challenges to the Spanish banking system in the face of the global crisis
Speech by Mr Miguel Fernandez Ordonez, Governor of the Bank of Spain, at the 50th anniversary of ESADE, Barcelona, 30 October 2008.
Christian Noyer: Some thoughts on the crisis
Address by Mr Christian Noyer, Governor of the Bank of France, to the Congress of the National Federation of the Crédit Agricole, Nice, 21 October 2008.
Hermann Remsperger: Stabilising the economy and the financial system – lessons and challenges for monetary policy and supervision
Keynote speech by Professor Dr Hermann Remsperger, Member of the Executive Board of the Deutsche Bundesbank, at the 16th Central Banking Seminar of the Bank of Korea on "Global Stagflation Threat and Monetary Policy", Seoul, 21 October 2008.
Christian Noyer: A review of the financial crisis
Speech by Mr Christian Noyer, Governor of the Bank of France, at the Hearing before the Finance Commission of the Assemblée nationale, Paris, 7 October 2008 (updated 15 October 2008).
Mervyn King: Monetary policy developments
Speech by Mr Mervyn King, Governor of the Bank of England, to the CBI, Institute of Directors, Leeds Chamber of Commerce and Yorkshire Forward at the Royal Armouries, Leeds, 21 October 2008.
Jose Manuel Gonzalez-Paramo: Future of banking supervision in Europe
Speech by Mr Jose Manuel Gonzalez-Paramo, Member of the Executive Board of the European Central Bank, at the IBF National Conference 2008 “Beyond Financial Turmoil”, Dublin, 22 October 2008.
Lorenzo Bini Smaghi: Some thoughts on the international financial crisis
Speech by Mr Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank, at a meeting with the Unione Cristiana Imprenditori e Dirigenti, Milan, 20 October 2008.
T T Mboweni: Lessons to be drawn from the financial crisis for multilateralism and global financial co-operation
Keynote address by Mr T T Mboweni, Governor of the South African Reserve Bank, at a charity gala dinner, organised by the University of Pretoria, Pretoria, 15 October 2008.
Ben S Bernanke: Stabilising the financial markets and the economy
Speech by Mr Ben S Bernanke, Chairman of the Board of Governors of the US Federal Reserve System, at the Economic Club of New York, New York, 15 October 2008.
Ben S Bernanke: Remarks
Speech by Mr Ben S Bernanke, Chairman of the Board of Governors of the US Federal Reserve System, at the President's Working Group Market Stability Initiative Announcement, Washington DC, 14 October 2008.
Jean-Claude Trichet: The financial turbulence – where do we stand?
Speech by Mr Jean-Claude Trichet, President of the European Central Bank, at the Economic Club of New York, New York, 14 October 2008.
Mario Draghi: Challenges now facing the world economy
Statement by Mr Mario Draghi, Governor of the Bank of Italy, at the Seventy-Eighth Meeting of the Development Committee, Washington DC, 12 October 2008.
Ben S Bernanke: Current economic and financial conditions
Speech by Mr Ben S Bernanke, Chairman of the Board of Governors of the US Federal Reserve System, at the National Association for Business Economics 50th Annual Meeting, Washington DC, 7 October 2008.
Nout Wellink: Responding to uncertainty
Remarks by Dr Nout Wellink, President of the Netherlands Bank and Chairman of the Basel Committee on Banking Supervision, at the International Conference of Banking Supervisors 2008, Brussels, 24 September 2008.

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