Inflation expectations Finally, I will say a few words on inflation expectations, which most economists see as central to inflation dynamics. But there is much we do not understand about inflation expectations, their determination, and their implications. I will divide my list of questions into three categories. First, we need to understand better the factors that determine the public's inflation expectations.
Given informative and comparable disclosures of internal risk measures, the market will react more quickly and appropriately than any regulator to variations in risk postures, and such responses will help banks strike the right balance between risk and reward.