As you can see on the right-hand chart, a growing gap has emerged between the inflation expectations of market participants on the one side, and households and professional forecasters on the other. This is not about differences in the level, which – as I have argued before – may not mean much.
This is about different dynamics, with the two-year moving correlation between market-based and household expectations dropping from 0.8 in the summer of last year to below 0.3 in June, the lowest level in nearly nine years.