This is from the Cleveland Fed Inflation Expectations Estimator, updated through Dec 1, 2012. One of the primary goals of the Fed’s new rule-based QE3 is to reduce real interest rates by increasing inflation expectations. Is it working?
The markets obviously do not agree with the inflation hawks that warn of runaway inflation any day now due to all that “money printing”. Look at the following time series yield curve:
I think that we will have increased inflation, but probably not until the economy improves.