BIS Review 87/2007  1  This does not mean that we can be complacent about near-term developments, as inflation expectations and monetary policy credibility are determined in part by these short term considerations.
So in conclusion, there are a number of anomalies present in financial markets in terms of pricing and volatility. There are also some misplaced perceptions amongst market participants about the degree of liquidity present in some market segments. That strikes me as a dangerous combination and unlikely to be resolved smoothly.