Incidentally, as oil prices moved higher in recent weeks, the inflation risk premia also rose amid an increasing willingness on the part of investors to hedge against inflation in an environment of strongly declining deflation probabilities. This is also consistent with survey-based evidence. For example, a recent survey of 62 fund managers by Bank of America Merrill Lynch revealed that a rise in inflation is thought to be the most underestimated tail risk for global financial markets in 2018. One fund manager in two considers a rise in inflation as a risk to current market prices. Now, whether or not this risk is real, or how much we should worry about it, is an entirely different question. I will pass no judgment on the US. In the euro area, however, we see no such inflation tail risks at the current juncture. Inflation is expected to converge only very gradually to levels closer to 2%. For this reason, an ample degree of monetary stimulus remains necessary for underlying inflation pressures to continue to build up, and we expect the ECB’s key interest rates to remain at their present levels for an extended period of time, and well past the horizon of our net asset purchases. At the same time, we currently see no reason to believe that the distribution of future inflation risks has moved permanently lower. 13 It is true that it is taking longer than usual for inflationary pressure to emerge.
What happens now is that participants in CHIPS submit payment instructions throughout the day. But actual settlement, performed on a net basis, is deferred and becomes final only at the end of the processing day. In the new arrangement, which the New York Clearing House has announced it will put into operation in January, CHIPS participants will continue to submit payment instructions throughout the day. However, through the use of a bilateral and multilateral matching algorithm, the vast majority of payments will be settled and become final over the course of the day. By ensuring that final payment is made promptly, the new procedure will reduce settlement and operational risks and enable participants to manage their risks more effectively. A third major improvement to the U.S financial infrastructure that the Federal Reserve has already implemented deals with a new net settlement service for Fedwire. The net settlement service was  1  BIS Review 93/2000  implemented in 1999 in response to requests from major US clearing associations. These groups asked the Federal Reserve to help their members reduce settlement risk while improving operational efficiency. They noted that Fedwire itself is not an effective way to settle obligations among the members of a clearing group. We agreed and rolled out a new settlement vehicle. This new service helps clearing houses and related arrangements achieve their goals by offering Fedwire-like, immediate and irrevocable finality for entries that have been submitted in a convenient file format by a group’s agent.