On the other hand, however, the current turmoil complicates the derivation of the risk premia because upwardly “distorted” money market rates are usually included within the set of chosen interest rates. 5.2.3  Financial-market-based inflation expectations  It is extremely important for central bankers to know the level of inflation expectations.
They provide information on what inflation rates are taken into account in wage negotiations, for example, and whether there is a risk that temporary inflation shocks will lead to a permanent increase in the inflation rate which could not be tolerated by monetary policy. Long-term inflation expectations are therefore a good indicator for the credibility of monetary policy.