Institution: Expected tight monetary policy stance helps explain the decrease in inflation expectations.

Chris Zaccarelli of Northlight stated that the apparent discrepancies in market expectations for future inflation and interest rates may be deceptive. The recent increase in energy prices related to war and the Federal Reserve's recent pivot towards tightening have caused federal funds futures to reflect expectations of at least one rate hike this year. However, oil prices have recently dropped significantly. At the same time, expectations reflected in completely different swap markets suggest that the one-year inflation rate will approach the Fed's 2% target. "Both markets could be right," Zaccarelli said, because "some members of the Federal Reserve may want to hike rates in order to bring inflation down." However, he predicts that the Fed will keep rates unchanged, rather than hiking them.