## Figure 1.5. US Inflation Expectations and Term Premium

## Source details

**Canonical URL:** [Figure 1.5. US Inflation Expectations and Term Premium](https://www.imf.org/-/media/files/publications/gfsr/2018/april/ch1/pdf/figure1-5.pdf)

## Other formats

- [Markdown version](/-/media/files/publications/gfsr/2018/april/ch1/pdf/figure1-5.pdf.md)
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### Overview
- Two-panel figure:
  - Panel 1: US Term Premium and Dispersion of 10-Year-Ahead Inflation Expectations (Percent)
  - Panel 2: Market-Implied Probability of High Inflation (Percent chance of CPI Inflation > 3 percent over five years)
- Caption summary: Term premiums have moved lower, and uncertainty about future inflation has declined. Markets are not pricing in sharply higher inflation.

### Panel 1 — US Term Premium and Dispersion of 10-Year-Ahead Inflation Expectations
- Series and labels:
  - Ten-year term premium (left scale)
  - Dispersion of 10-year-ahead inflation forecasts (three-quarter moving average, right scale)
  - United States; Euro area
- Axis values (preserved exactly from the figure):
  - Left scale: –1.0, –0.5, 0.0, 0.5, 1.0, 1.5, 2.0, 2.5, 3.0, 3.5, 4.0, 4.5
  - Right scale: 0.1, 0.2, 0.3, 0.4, 0.5, 0.6, 0.7, 0.8, 0.9, 1.0
- Year ticks shown (panel x-axes as printed): 2010 11 12 13 14 15 16 17 18
- Sources: Bloomberg Finance L.P.; Federal Reserve Bank of Minneapolis; and IMF staff estimates.
- Note: In panel 2, euro area options are illiquid. CPI = consumer price index.

### Panel 2 — Market-Implied Probability of High Inflation
- Definition preserved exactly: Percent chance of CPI Inflation > 3 percent over five years
- Market message (from the figure text): Markets are not pricing in sharply higher inflation.

### Key findings (as presented in the figure)
- Term premiums have moved lower.
- Uncertainty about future inflation has declined.
- Markets are not pricing in sharply higher inflation.

*Sources: Bloomberg Finance L.P.; Federal Reserve Bank of Minneapolis; and IMF staff estimates.*

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_Source: https://www.imf.org/-/media/files/publications/gfsr/2018/april/ch1/pdf/figure1-5.pdf_