During the first half of 2004 break-even inflation rates for the euro area displayed a slight upward movement, unlike the survey evidence reviewed before. In recent months this movement has been partially reversed.
While the different behaviour of break-even inflation rates and survey expectations may reflect a time variation in the risk premium contained in nominal bond yields, due for instance to uncertainties associated with the recent increases in energy price, these recent developments have not gone unnoticed at the ECB.10 Whether the movements in the break-even inflation rates, which are fairly small in absolute terms, reflect or not underlying changes of various risks premia is not yet clear.