from pension funds looking to maturity-match their longterm liabilities). What this means is that it is difficult to separate moves driven by changes in market liquidity, investor mandates or preferred habitat from moves driven by changes in underlying inflation expectations. For me, the inflation swaps market, which has grown and deepened in recent years, gives a more reliable read on underlying market participants’ views of inflation expectations than the gilt market data. Those swaps suggest that there has been little change in medium-term inflation expectations for some time (Chart 11). Chart 11 Medium term inflation expectations derived from inflation swaps(a) Per cent  5  4  3  2  1 2005  2006  2007  2008  2009  2010  2011  Sources: Bloomberg and Bank calculations. (a) Based on the 5-year, 5-year forward. Policy In these remarks, I have tried to explain how I personally read the main forces acting on the outlook for GDP growth and CPI inflation over the next few years. The final step is to explain my policy vote based on those views. At the moment, I see the risks to CPI inflation in the medium term as broadly balanced, around the 2% target. In particular, I expect that the upside risk from any deterioration in the level of potential supply is broadly offset by the downside risks to consumer spending. While there are certainly upside risks to the outlook from higher inflation expectations, those are not of immediate concern.
As always, I stand ready to change my views should the economic outlook change sufficiently to warrant it. BIS central bankers’ speeches  9