As market participants react in real time to any news potentially relevant for the medium-term inflation outlook, they support the monetary policy transmission process: they tend to frontload accommodation when inflation risks are skewed to the downside, and they tend to remove accommodation when risks are tilted to the upside.
You can see this on my next slide, which shows the breakdown of the ten-year overnight index swap (OIS) rate into its real and nominal components. Clearly, shifts in inflation expectations can, at times, have a significant impact on financial conditions and hence on economic developments.